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Expat Briefing Editorial Team
27 September, 2017
Singapore was once again chosen as the world's best place for expat living by HSBC's 2016 Expat Explorer survey, arguably the most definitive survey of its type. This article runs the rule over South East Asia's thriving "Lion City."
Where Is Singapore?
Singapore is a collection islands between Indonesia and Malaysia, with a land area of just under 700 sq km, making it about three-and-a-half times the size of Washington D.C. According to a July 2017 estimate, it is home to an estimated 5.9m people, three-quarters of whom are of Chinese descent.
With a tropical climate, Singapore tends to be hot and humid. There are two monsoon seasons bringing heavy rainfall from December to March and from June to September. The inter-monsoon season sees frequent late afternoon and early evening thunderstorms.
What Is Singapore?
Is it a country? Is it a city? Or is it both? Singapore is often referred to as a city-state, but its official title is the Republic of Singapore, and it has been an independent state for more than 50 years.
Singapore was founded as a British trading colony in 1819 and formed an important strategic trading and naval post within the British Empire in the 19th and early 20th centuries. But after gaining full independence in 1965 (following a short-lived experiment as a part of the Malaysian federation), Singapore has become one of the world's most prosperous countries with strong international trading links and one of the busiest international ports.
What Is The Official Language Of Singapore?
Actually, there's four! By virtue of its large Chinese population, Mandarin is one of the official languages of Singapore, spoken by about 36 percent of the population. The other three are English, spoken by about 30 percent of people, Malay, spoken by about 12 percent, and Tamil, spoken by 3 percent.
An Economic Miracle
Singapore enjoys a remarkably open economy and corruption-free environment, with GDP-per-capita of an estimated USD87,900 in 2016 – the seventh-highest in the world.
The economy depends heavily on exports, particularly in consumer electronics, information technology products, and pharmaceuticals. However, in just over four decades, Singapore has established a thriving financial center of international repute, serving not only its domestic economy, but also the wider Asia Pacific region and in some instances, the world.
Singapore's finance sector offers a broad range of financial services including banking, insurance, investment banking and treasury services, and it is considered a major league financial center alongside New York, London and Hong Kong.
The presence of the large global financial institutions and multinational companies in the city also ensures a sizeable army of expats from Europe, North America and elsewhere around the globe.
Singapore's economy bounced back strongly from the global financial crisis, growing a spectacular 14 percent in 2010. However, economic growth has tailed off in more recent years, to about 2 percent in both 2015 and 2016.
Singapore's free-floating currency is the Singapore dollar (SGD). At the time of writing, USD1 = SGD1.35.
What Do They Say About Singapore?
According to Expat Explorer, expats living and working in the city-state are generally happy with their lot on a number of different levels, with many reporting that they enjoy a good quality of life combined with strong career prospects and high earnings.
Certainly, from a financial point of view, Singapore is hard to beat. On average, expats in Singapore earn USD139,000 which is significantly higher than the global average of USD97,000. And well over half (56 percent) of the survey's respondents said that living in Singapore has allowed them to save faster for their retirement. In addition, a similar percentage reported that moving to Singapore has helped them to contribute towards their other long-term savings and investments more quickly. Indeed, over a third (37 percent) of expats move to Singapore specifically to increase their earnings, compared with the global average of 25 percent.
Singapore is also a good place to advance one's career prospects according to 62 percent of respondents, which is well above the global average of 43 percent.
And more often than not, it would seem that expat professionals in Singapore enjoy good job perks, with just under three quarters (73 percent) answering that they receive at least one benefit as part of their employment contract, compared with 67 percent globally. Health and medical allowances are the most widespread employer-provided benefit, with 60 percent of those participating in Expat Explorer receiving medical allowances.
Importantly, despite muted rates of economic growth in recent years, expats remain upbeat about Singapore's economy, with almost three quarters (73 percent) expressing confidence about the city-state's economic prospects.
Singapore is also noted for its low rates of crime compared with other major cities, particularly in the West, and 84 percent of expats in Singapore said they feel safer than they did at home, more than in any other country and above the expat global average of 52 percent. Furthermore, the vast majority of expats see Singapore as politically stable, with 89 percent confident about the city-state's political stability. This compares with a global average of 51 percent.
Singapore also has the best school system in the world, according to a December 2016 report from the OECD. The rankings were based on test results from around 540,000 15-year-old students in 72 countries on science, reading, maths, and collaborative problem-solving.
Tax In Singapore
For resident individuals, Singapore's tax regime is fairly benign. In 2017, residents are taxed at progressive rates up to 22 percent on income accruing in or derived from Singapore. The 22 percent top rate applies to incomes in excess of SGD320,000
Since January 1, 2004, foreign income received or deemed received by a resident individual in Singapore is no longer subject to Singapore income tax, except if received through a partnership in Singapore.
A non-resident employee present in Singapore for more than 60 days but less than 183 days in a calendar year faces a 15 percent tax on gross employment income, or is taxed as a resident on that employment income, whichever is higher. For non-resident individuals withholding taxes are levied on Singapore-source income at varying rates; foreign-source income is untaxed whether remitted or not.
Non-resident individuals employed in Singapore for 60 days, or less, are exempt from tax on employment income. Other income derived in Singapore by non-residents is taxed at the corporate tax rate, with the exception of interest income derived from approved financial institutions in Singapore, which is tax-exempt. In 2017, the rate of corporate tax is 17 percent.
Singapore currently has comprehensive tax treaties with around 80 countries. Notable among these are the treaties with Australia, Belgium, Canada, China, France, Germany, India, Italy, Japan, the Russian Federation, South Africa and the United Kingdom.
Singapore has enacted legislation to exchange tax-related information with other countries from September 2018 under the OECD's Common Reporting Standard (CRS).
Singapore has also entered into an intergovernmental agreement with the United States for the purposes of the US Foreign Account Tax Compliance Act (FATCA). FATCA requires all FIs outside of the United States to submit regular information on financial accounts held by US persons to the US Internal Revenue Service, or otherwise face a 30 percent withholding tax on certain payments of US-sourced income.
The Singapore Country Section of Expat Briefing contains more information about living and working in Singapore, including financial considerations, taxation, healthcare, education, employment and business, accommodation, recreation, society and culture, and much more.
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