Singapore Focus

Expat Briefing Editorial Team, 01 November, 2013

Recently rated as the safest place in the world for expats raising children, Singapore is one of the most popular expat destinations in Asia and the subject of this briefing.


Located in South East Asia, Singapore is a highly developed and successful free market economy which enjoys an open and corruption-free environment, stable prices, a low tax regime and a per capita GDP equal to that of most parts of Western Europe.

Historical And Economic Overview

Although most probably think of Singapore the city, the Republic of Singapore is actually a 700 square kilometre island sandwiched between Indonesia and the tip of the Malay peninsula. The city 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.

After the Second World War, decolonisation meant that Singapore gravitated towards the Malaysian Federation, which it joined in 1963. However, this was a short-lived phase of the country’s history, and, two years later, Singapore became an independent republic. Subsequently, it has become one of the world's most prosperous countries with strong international trading links and one of the busiest international ports.

Since independence, Singapore has been a parliamentary republic with a directly elected unicameral parliament. As a legacy of its association with the former British Empire, Singapore’s legal system is based on English common law. Also, English is one of the four official languages spoken on the island, alongside Chinese, Malay and Tamil.

Approximately three-quarters of Singapore’s population of 5.3m are of Chinese origin but there are significant minorities of Malaysians and Indians, while the presence of the major global multinationals in the city also ensures a sizeable army of expats from Europe, North America and elsewhere around the globe. Singapore’s currency is the Singapore dollar, which has been appreciating against the US dollar. In November 2013, USD1 was worth SGD1.24.

Singapore enjoys a remarkably open economy and corruption-free environment, stable prices, and a per capita GDP higher than that of most developed countries. The economy depends heavily on exports, particularly in consumer electronics, information technology products, pharmaceuticals, and on a growing financial services sector. Following a shallow recession in 2009, the economy surged in 2010 with growth of 14%. Since then economic growth has been much more muted, slowing to just 1.3% last year. However, Singapore has attracted major investments in pharmaceuticals and medical technology production and will continue efforts to establish itself as Southeast Asia's financial and high-tech hub.

The Business and Financial Centre

In just over four decades, Singapore has established a thriving financial centre of international repute, serving not only its domestic economy, but also the wider Asia Pacific region and in some instances, the world. Singapore's financial centre offers a broad range of financial services including banking, insurance, investment banking and treasury services.

A key aspect of Singapore’s financial centre is its deep and liquid capital market. With one of the more well-established capital markets in Asia-Pacific, the Singapore Exchange (SGX) is the preferred listing location of close to 800 global companies. Today, Singapore has grown to be the largest Real Estate Investment Trust (REITs) market in Asia ex-Japan and also provides an extensive offering of investments in business trusts of shipping, aviation and infrastructure assets.

Singapore’s bond market has also grown significantly. With an extensive range of both Singapore government securities and foreign corporate bonds available, Singapore offers fixed income investors a wide range of investment opportunities.

As one of the top four most active foreign exchange trading centres in the world, Singapore is also the second largest over-the-counter derivatives trading centre in Asia, and a leading commodities derivatives trading hub.

With its key import and export links in Asia, and tax incentives for international and regional headquarters, Singapore has also become a good location for multinationals to locate their marketing, trading and distribution activities.

Furthermore, Singapore is an ideal place in which to locate an investment holding company with its extensive network of double tax avoidance treaties that reduce the rate of withholding tax on dividends remitted by foreign subsidiaries to Singaporean investment holding companies.

Islamic Banking

Singapore is intent on becoming an Islamic banking hub, particularly in the area of wealth management. Although it faces some challenges, including the creation of a designated regulatory system, there are almost 270 million Muslims right on Singapore’s doorstep in the Islamic states of Malaysia and Indonesia. The city has also attracted interest from Middle Eastern investors.

While Singapore has its work cut out catching up with more established Islamic banking centres such as Labuan and the United Arab Emirates, Prime Minister Lee made a start in the 2005 budget by announcing new rules abolishing double taxation for Shariah-compliant property transactions. The budget also granted Islamic bonds the same concessionary tax treatment as those given to conventional financing.


For resident individuals, Singapore’s tax regime is fairly benign. Capital gains taxes are only levied in very limited circumstances, there are no gift taxes and estate duty was abolished in 2008. Personal income tax rates in Singapore are also relatively light: resident individuals are taxed at progressive rates up to 20% (reduced from 22% in 2006) on income accruing in or derived from Singapore.

From 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% 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.

Singapore currently has comprehensive tax treaties with around 70 countries. Notable among these are treaties with Australia, Belgium, Canada, China, France, Germany, India, Italy, Japan, the Russian Federation, South Africa and the United Kingdom.

Living In Singapore

Work and Residence

Non-residents must hold a valid work pass before they can work in Singapore. Employers who hire foreigners without valid work passes can be prosecuted under the Employment of Foreign Manpower Act.

The Employment Pass (EP) is the main type of work permit issued to foreign workers in Singapore and is aimed at professionals working in managerial, executive or specialised jobs earning at least SGD3,000 per month. EP applications are however closely scrutinised by the Ministry of Manpower, and applicants will need to show appropriate qualifications and work experience to be successful. The application will also depend on the employer's track record in Singapore. EPs are valid for up to two years for first time applicants, and up to three years for renewals.

Under Singapore’s Global Investor Programme (GIP) foreign investors with substantial capital and good entrepreneurial track records may apply for permanent residence. Under this scheme, applicants must invest at least SGD2.5m in a new business or to expand an existing business operation, or invest at least SGD2.5m in a GIP-approved fund.

Alternatively, the EntrePass scheme exists for those wishing to make a less substantial investment in Singapore. To qualify for an EntrePass, applicants must register a Private Limited Company with the ACRA and submit a credible business plan. The company must have at least SGD50,000 in paid-up capital and the applicant must hold at least 30% of the shares of the company. The company must not have been registered for more than six months at the point of application. An EntrePass has an initial validity period of one year and will remain valid as long as the business remains sound. Immediate family members of the EntrePass holder are also allowed to stay in Singapore while the business develops.

Also, persons born in Singapore or who can show proof that they have or used to have rights of abode in Singapore may also apply for in-principle approval for permanent residence.

Social contributions to the CFP (Central Provident Fund) amount to 36% of gross salary (16% from the employer and 20% from the employee), but they are optional for non-permanent residents.

Lifestyle and Cost of Living

Singapore’s tropical climate ensures that temperatures are hot the year round. With two monsoon seasons from December to March and from June to September, the climate is also very humid and in the heat of the city those from chillier European or North American climes may find the atmosphere somewhat oppressive. Nevertheless, Singapore is a modern, cosmopolitan and vibrant city where various far eastern cultures mix harmoniously with western influences.

Singapore is also one of the safest cities in the world, with a very low crime rate compared with many major cities in the West. Consequently, it is rated by expats as one of the best places to raise children abroad. According to HSBC’s 2013 Expat Explorer Survey, with the peace of mind that they can walk around the city any time of the day and still feel protected, nearly nine in ten (86%) expat parents in Singapore regard the destination as the most child-safe haven. Additionally, Singapore ranks second place overall for Raising Children Abroad and the country fares well for improvements seen in children's health and wellbeing with seven in ten (71%) expat parents rating this aspect favourably compared with the global average of just over half (56%). Furthermore, the Expat Explorer report notes that with exposure to a mixture of both Western and Eastern cultures, more than a third (36%) of expat parents in Singapore say that their children are generally more outgoing compared with the global average (25%).

Singapore is however one of the most expensive cities in Asia and the fifth most expensive in the world for expats, according to Mercer's 2013 Cost of Living survey, which is designed to help multinational firms and governments decide on compensation packages for expatriate employees.


Singapore’s healthcare system provides a high standard, both in terms of facilities and services, and is funded primarily via a system of compulsory contributions known as Medisave. Singapore resident employees are obliged to contribute between 6-8% of their monthly wages to a personal Medisave account, the contents of which can be used to pay for the medical expenses of the account holder, or their close family members. Non-residents are able to access healthcare services in Singapore, but must pay out of their own pockets; they are not permitted to contribute to Medisave accounts. Additionally, they may pay higher costs than Singapore residents if they opt to be treated in government hospitals.


Education in Singapore is divided into 6 years of primary education (4 years of foundation stage and 2 years of orientation stage education) culminating in the Primary School Leaving Examination, 4-5 years of secondary education (studying for either O or N levels, depending on whether the student is in the Special or Express streams, or the Normal (Academic) or Normal (Technical) streams, respectively).

There are several different types of secondary school, including autonomous schools (which get greater autonomy in terms of school management and – to a certain extent – curriculum) and independent schools, specialised independent schools, integrated programme schools (which permit gifted secondary age students in Singapore to pass straight to A levels, or to an International Baccalaureate or equivalent), and privately funded schools.

This is then usually followed by 2-3 years of pre-university education (studying for A-levels), and then tertiary education, studying for either a diploma or a degree.

In addition, there are also around 30 international schools in Singapore, although they are likely to be a relatively expensive option.

Renting and Buying Property

Singapore’s limited land availability means that the real estate stock has to be carefully managed. Naturally this makes property quite expensive to both rent and buy. Indeed, Mercer’s survey showed that rents for a high-standard three bedroom house average just under USD7,300 per month, while you can expect to pay on average just under USD3,800 per month to rent a luxury two-bedroom apartment, although this is about half the rates charged to rent similar properties in Hong Kong.

The need for Singapore to manage land development means that foreigners face restrictions when buying certain types of property on the island, such as vacant land, landed properties or bungalows, semi-detached and terrace houses. In these cases, foreign buyers need to apply for approval from the Singapore Land Authority for permission to buy.

Once a buyer has identified a property, they can pay 1% of the purchase price in exchange for the Option to Purchase, which is usually prepared by the seller's solicitor or property agent. The buyer then has 14 days to decide whether to proceed with the purchase. If the option is exercised, an additional 9% of the purchase price is passed to the seller's solicitor. Alternatively, buyers can bypass this procedure and ask their realtor to prepare the Offer to Purchase.

Property prices in Singapore have been rising sharply in recent years, and the Government has increased rates of stamp duty in an attempt to cool the market. In December 2011, in addition to the standard buyer's stamp duty of between 1% and 3%, it placed an Additional Buyer's Stamp Duty (ABSD) at a rate of 10% on the purchase price or market value of residential property purchased by foreigners and non-individuals, such as companies. With prices continuing to rise, ABSD rates were raised further across the board in January 2012, with the rate on all purchases by foreigners and non-individuals being hiked to 15%. Permanent residents now pay an ABSD of 5% on their first property and 10% if buying a second or subsequent residential property in Singapore, while a 7% ABSD applies to Singaporeans when buying a second property and 10% when buying a third or subsequent residential property.

Property tax changes are also likely as a result of an announcement in the Government’s budget for 2013 that more progressive property tax rates will be introduced from 2014. Property tax rates will be raised for higher-value residential properties, with the largest hikes applying to investment properties that are not occupied by their owners. In fact, a draft bill empowers the Minister of Finance to impose a maximum tax rate or rates in the future of up to, but not including, 36% on the annual values of the properties.

In addition, the loan-to-value limit has been lowered to 50% on housing loans for property purchasers who are not individuals (including corporations, trusts and collective investment schemes, amongst others); and from 70% to 60% on housing loans for property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase.

Further Reading

A great deal of helpful information on living, working and doing business in Singapore, can be found in the Singapore Knowledge Base section of

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