Personal Tax

Singapore Personal Income Tax structure is one of the friendliest and most competitive in the world. The tax year is from 1 January to 31 December in each calendar year and income is assessed on a preceding year basis.

Key points of Singapore income tax for individuals include:

  • The amount of income tax that you have to pay depends on your tax residency in Singapore. The taxes for residents are different from non-residents.
  • Top marginal resident tax rate of 20% kicks in at S$ 320,000 of taxable income till YA 2016. From YA 2017 onwards, the top marginal resident tax rate of 22% kicks in at S$ 320,000 of taxable income.
  • Non-residents are taxed at the flat rate of 15% or the resident rates whichever results in a higher tax amount.
  • In general, all remuneration arising from an employment under which duties are performed in Singapore would be fully taxable irrespective of where the funds are made available to you.
  • Besides salaries and bonuses, perquisites such as housing and stock options will form part of your taxable employment income.
Personal Tax For Singapore Residents
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    Personal Income Tax Rates

    Singapore Tax adopts a progressive personal tax rates, relative to an individual’s amount of income.

    Year of Assessment 2015 and 2016
    0 – 20,000 0.0
    20,001 – 30,000 2.0
    30,001 – 40,000 3.5
    40,001 – 80,000 7.0
    80,001 – 120,000 11.5
    120,001 – 160,000 15.0
    160,001 – 200,000 17.0
    200,001 – 320,000 18.0
    Above 320,000 20.0
    Year of Assessment 2017 NEW*
    Band ($) Rate (%)
    0 – 20,000 0.0
    20,001 – 30,000 2.0
    30,001 – 40,000 3.5
    40,001 – 80,000 7.0
    80,001 – 120,000 11.5
    120,001 – 160,000 15.0
    160,001 – 200,000 18.0
    200,001 – 240,000 19.0
    240,001 – 280,000 19.5
    280,001 – 320,000 20.0
    Above 320,000 22.0
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    Who is tax resident?

    Different tax rates apply for tax residents and non-residents. You will be treated as a tax resident for a particular Year of Assessment (YA) if you are a:

    • Singaporean; or
    • Singapore Permanent Resident (SPR) if you have established your permanent home in Singapore; or
    • Foreigner who stayed/worked in Singapore for 183 days or more in previous year (excludes director of a company).

    For Foreigners working in Singapore, the following conditions are also applicable for the taxability of their income in Singapore:

    • If you work in Singapore for 60 days or less in a calendar year, you will be exempt from tax on your earnings here.
    • If you stay or work in Singapore for 61 to 182 days in a calendar year, your income will be taxed at 15% or resident rates for individuals, whichever gives the higher tax.
    • If you stay or work in Singapore for 183 days or more in a calendar year, your income will be taxed at resident rates for individuals.
    • If you stay or work in Singapore for a continuous period of at least 183 days over two years, your income will be taxed at resident rates for individuals.
    • If you stay or work in Singapore for three consecutive years, your income for all years will be taxed at resident rates.
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    What is Chargeable Income?

    Chargeable income (Taxable Income) is the net income after deduction of expenses, donations, and personal relief. Personal tax relief, subject to conditions, includes support of dependents, academic tuition, professional development expense and premiums paid on life insurance policies.

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    How is Taxable Income Computed?

    The Inland Revenue Authority of Singapore [IRAS] provides the formula in determining the Taxable Income of an individual. It is the following:

    • Total Income Less Expense = Statutory Income
    • Statutory Income Less Donations = Assessable Income
    • Assessable Income Less Personal Reliefs = Taxable Income
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    What is Total Income?
    • Profits earned from business, trade, vocation, profession as a partner in a partnership or sole proprietor.
    • Gains from employment (including Benefits-in-kind).
    • Dividends, Investment income, interests.
    • Rental fees, Royalties, Premiums, and other Profits accumulated from properties.
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    Benefits-in-kind received as part of the employment

    Benefits-in-kind received as part of the employment”]
    Benefits received in kind are taxable (either fully or partially) and include:

    • Residential Accommodation
    • Furniture & Furnishings provided
    • Food & Clothing, Hotel Accommodation
    • Home Leave Passage
    • Motor Car, Driver
    • Share Options
    • Interest Subsidy
    • Income Tax paid by Employer
    • Insurance Premium paid by Employer if employee is stated beneficiary in the Policy
    • Subscription, Entrance Fees, Memberships…
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    What are Expenses?
    • Employment-related
    • Rental-related
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    What are Donations?

    Donations made to qualified charity organizations in Singapore.

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    What are Personal Reliefs?

    Qualified course or tuition fees, earned income relief, parent relief and support of dependents, professional development expenses and premiums paid on life insurance policies, and any other special reliefs.

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    How Are Employer-Provided Fringed Benefits Taxed?

    By laws, all profits and gains obtained by an individual, local or foreign, as a consequence of employment are subject to tax, except, if they are categorically exempted from income tax or are included in an existing administrative concession.
    Gains and profits cover all benefits derived in money or in another form, paid or granted as part of an employment. Examples of tax benefits bestowed by an employer are:

    • Car furnished by an employer
    • Accommodation and housing allowance
    • Refunds of medical and dental treatments for dependents beside the income earner [You], spouse, and children
    • Overtime pay
    • Fixed monthly meal allowances
    • Fixed monthly allowance for transportation or if mileage on private cars are reimbursed
    • Per Diem allowances (such as allowances provided on overseas trips for business purposes), as long as the amount is beyond the acceptable rates.

    These fringe-benefits are taxed as soon as they are enjoyed by the employees. Nevertheless, certain non-cash benefits (i.e. accommodations like housing) are taxed using special formulas, known as concessionary basis, leading to lower taxation on these benefits-in-kind. Hence, a separate compensation package has been structured exclusively for executives to help them mitigate on their individual tax liability in Singapore.

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    TAX TREATMENT OF INCOME EARNED OVERSEAS

    Generally, overseas income received in Singapore is not taxable. This includes overseas income brought into Singapore. However, there are certain circumstances under which overseas income is taxable:

    • It is received in Singapore through partnerships in Singapore.
    • Your overseas employment is incidental to your Singapore employment. That is, as part of your work here, you need to travel overseas.
    • You are employed outside Singapore on behalf of Government of Singapore.

    Tips on ways to save tax

    • Tax residents are eligible for tax reliefs that can be offset against the assessable income. You can get reliefs for wife support, child maintenance etc.
    • You may claim expenses incurred against your employment income; enjoy tax deductions for approved charitable donations.
    • Under the Not Ordinarily Resident (NOR) Scheme, you can enjoy either Time Apportionment of Singapore employment income or Tax Exemption of Employer’s contributions to Overseas Pension Fund, or both.
    • If you work for a foreign employer and need to travel overseas in the course of work, you may enjoy time apportionment of employment income under the Area Representative Scheme.
    • With the Avoidance of Double Taxation Treaties signed by Singapore, your income may not be taxed twice in Singapore and your home country.
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    CAPITAL GAINS TAX, INHERITANCE TAX, ESTATE DUTY

    Singapore does not have any taxes on Capital Gain and effective 2008; Singapore has abolished Inheritance tax (commonly known as Estate Duty – tax that you have to pay when you die which comes out of the financial estate that you leave behind.)

    Singapore does not impose any capital gains tax on personal investment income that arises in relation to real assets, such as property, financial assets, such as shares or bonds, and intangible assets.

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    FILING PERSONAL INCOME TAX RETURNS

    Who must file personal tax return?

    • If you are an Resident/Employment pass/PEP/Entrepass holder,
    • If your annual income in Singapore in 2010 is above S$22,000,
    • If you have received a letter from Inland Revenue Authority of Singapore inviting you to file personal income tax. This is regardless of the amount of your annual income for the previous year.

    Employer Responsibility:
    Companies must give completed Forms IR8A to employees, showing remuneration and benefits in- kind for the previous calendar year, by 1 March.

    Personal Tax Filing Due Date:
    It is mandatory under law to file for the annual personal tax return to IRAS by 15 April 2011. IRAS diligently enforces the requirements relating to the filing of the personal tax. Please comply to avoid paying fines and/or court prosecution.

    Income is assessed on a preceding calendar year basis, ending 31 December. You must File Your Annual Tax Form by 15 April of the following year. If tax return is not filed by the 15 April deadline, IRAS may raise estimated assessment. You can usually expect to receive the income tax bills from May to August.

    Settlement of Personal tax liability:
    Paying your taxes: Sign up for the 12-month interests free GIRO Deduction Plan to pay your income tax by instalments. Otherwise, full payment has to be made within one month from the date of the income tax bill.
    If the tax is not paid by the due date, a 5% penalty and 1% additional penalty per month up to 12% (total of 17%) will be imposed. In addition, IRAS may take recovery action.

    • Impose an additional penalty of 1% up to a maximum of 12% on any unpaid tax for each month that the tax remains unpaid;
    • Direct the taxpayer’s employer to deduct any unpaid tax from his salary;
    • Direct the taxpayer’s banks, tenants or any third parties to pay any unpaid tax to IRAS from any money held for the taxpayer or due to him;
    • Restrict the taxpayer from leaving Singapore
    • Take legal actions against the taxpayer.

    Objection to the Notice of Assessment (NOA)
    If an individual does not agree with the assessment raised, he / she have to lodge an objection in writing within 30 days from the date of issue of notice of assessment; otherwise the assessment will automatically become final.
    Need Assistance to meet with your Personal Tax Compilation and Filing?
    Alpha can assist you in your personal income tax filings. Our personal tax filing services include:

    • Registration for new tax payers
    • Preparation and filing of income tax return based on your income and determination of possible deductions and reliefs that are applicable to you
    • Request for extension of deadline, if necessary
    • Preparation of Form IR8A/IR21 for employees
    • Tax planning and tax advice
NON-RESIDENTS
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    Non-Resident Employee

    The employment income of a non-resident individual in Singapore is charged at the higher of:

    • 15% on the gross amount (without any deduction for personal reliefs and contribution to provident funds); or,
    • Corresponding tax under the resident basis.
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    Director’s fees, consultation fees & all other income

    Income from other sources (unless exempted) will be taxed at a flat rate which is currently 20%. There is an exemption in respect of the employment income of a non-resident individual (other than a director or public entertainer) who does not exercise employment in Singapore for more than 60 days during the year.

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    The Not Ordinarily Resident (NOR) Scheme

    The Not Ordinarily Resident (NOR) Scheme extends favourable tax treatment to qualifying individuals for a period of five years of assessment, provided such individuals meet the following criteria:

    • The individual must not have been a Singapore resident in the 3 consecutive years of assessment before the year he first qualifies for the NOR scheme; and
    • The individual must be a tax resident for the year of assessment in which he wishes to qualify for the NOR scheme and must also be employed by a Singapore employer.

    If you satisfy the above conditions and are accorded NOR status, you would be able to enjoy the following tax concessions:-
    Time-apportionment concession

    • Applicable if you have spent at least 90 days outside Singapore for business and derived a minimum annual income of S$160,000 from Singapore employment in the preceding year. You will only pay income tax on the portion of your employment income (including all benefits-in-kind with effect from Year of Assessment 20## but excluding director’s fees and any income tax payable in Singapore that is borne directly or indirectly by your company) according to the time you spend in Singapore.
    • Tax exemption of employer’s contribution to Non mandatory Overseas Pension Fund or Social Security Scheme
    • Applicable if you derive a minimum annual income of S$160,000 from Singapore employment in the preceding year. The employer’s contribution to non mandatory overseas pension funds or social security schemes for non-citizens/ non-permanent residents of Singapore is tax exempt subject to NOR cap computed based on the contribution made by employer to the CPF for a Singapore citizen as required under the CPF Act and the employer does not claim deduction for the contribution.

    Area Representative Scheme:
    By concession, an area representative is taxed in Singapore on a proportion of the total remuneration package corresponding to the proportion of working days spent in Singapore during the year. However, benefits-in-kind provided in Singapore are fully taxable.

    To qualify as an Area Representative, you must satisfy these four criteria below:

    • you work in the representative office of a non-resident employer;
    • you are based in Singapore for geographical convenience;
    • you are required to travel substantially as you performed your duties for the foreign employer; and
    • your remuneration is paid by your foreign employer and not charged to a permanent establishment in Singapore.

    Under the Area Representative Scheme, even though your physical presence in Singapore might be less than 183 days in a calendar year due to substantial travelling, if your employment is a continuous period of at least 183 days straddling two years (under the two-year administrative concession) or if your employment in Singapore covers three continuous years (under the three-year administrative concession), you will be considered as a tax resident in Singapore for each year.

    Dual Contracts:
    Alternatively, if you are working for a group of companies, it may be possible to have a separate contract of employment for duties to be performed wholly outside Singapore (in respect of a non-resident employer) with a view to exclude the earnings from that offshore employment from Singapore tax.

    The IRAS routinely questions whether the duties performed inside and outside Singapore are genuinely separated and whether there are commercial and economic justifications for dual employment contracts. Therefore, these and other points would have to be considered in assessing whether separate employments would be justifiable. It is expected that most people who have a bona fide reason for a split contract should qualify under The Not Ordinarily Resident Scheme (see below). For this reason, it is anticipated that the IRAS will closely scrutinise dual contract arrangements implemented after the introduction of the Not Ordinarily Resident Scheme in the Year of Assessment 2003.

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    Letter of guarantee (LOG)

    A foreign individual who is employed by a foreign employer (e.g. representative office or entity not registered in Singapore) is required to provide LOG from a local bank or an established limited company in Singapore to cover his / her estimated tax for the coming Year of Assessment. If the LOG is not provided to the IRAS, an advance assessment will be issued.

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    If you are leaving Singapore or changing job

    If you are about to leave Singapore or changing to another job within Singapore, your current employer needs to notify IRAS and ensure that you settle all your taxes before you go. This process is known as tax clearance. If you have any existing stock options or awards on hand which have yet to be exercised or vested, you will be deemed to have derived gains from the stock or awards at the point of tax clearance.

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    Tax clearance for non-citizen employees

    Form IR21 must be completed at least one month before a non-citizen employee ceases employment in Singapore (including posting to an overseas location) or plans to leave Singapore for more than 3 months. Employers who fail to comply may be liable to a fine not exceeding $1,000 and for the employee’s unpaid tax, if any.

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    Need Assistance to meet with your Personal Tax Compilation and Filing?

    Alpha can assist you in your Singapore personal income tax filings. Our personal tax filing services include:

    • Registration for new tax payers
    • Preparation and filing of income tax return based on your income and determination of possible deductions and reliefs that are applicable to you
    • Request for extension of deadline, if necessary
    • Preparation of Form IR8A/IR21 for employees
    • Tax planning and tax advice

Disclaimer: The information contained in this website is for general reference only. While all reasonable care has been taken in the preparation of this information, Alpha cannot accept any liability for any action taken as a result of reading its contents without further consulting us with regard to all relevant factors.