In 2018, HSBC ranked Singapore the world’s best destination for expats.
The low crime rates, cleanliness, and cosmopolitan population make it an accommodating place for foreigners.
Read also: Most Promising Cities in Southeast Asia to Live and Work In
But thanks to its tax-friendly environment, it’s also an attractive place to build a career — or a business.
Here’s a quick guide to taxes in Singapore, so you know what you’ll need to cover the next time the local tax authorities come knocking:
- Who’s considered a tax resident in Singapore?
- Tax treatment of residents
- Various tax categories
- Tax deadlines to note
- Tax relief and deductions
Who’s Considered a Tax Resident in Singapore?
Tax residency in Singapore isn’t limited to citizens alone. Expats and even companies can qualify as tax residents if you meet the requirements.
For individuals, IRAS considers you a tax resident if you are:
- A Singapore Citizen or Permanent Resident who normally stays in Singapore, or
- A foreigner who has stayed or worked in Singapore for at least 183 days in the previous calendar year.
If you’re a foreigner who’s only working in Singapore for 60 days or less, you aren’t liable to pay taxes on your income.
There are certain exceptions though, like if you’re the director of a company in Singapore, a public entertainer, or a professional who’s been specially invited by a government body or private organisation. Short-term tax exemptions may not apply if you fall into one of these categories.
Tax Treatment of Residents
Being a tax resident comes with a variety of benefits — the first one being Singapore’s progressive tax system and low tax rates relative to the rest of Asia. You can also claim tax reliefs, which becomes especially important if you have to pay taxes in your home country as well.
As a tax resident, you’re taxed on all income earned in Singapore.
Your foreign-sourced income is exempt, however. That means if you have a business overseas or you’re renting out your apartment back home, you won’t have to pay tax to Singapore on that (unless you get that income through a partnership in Singapore).
Foreigners Working in Singapore for 61 to 182 Days
Unfortunately, neither the short-term tax exemption nor the progressive tax resident rates apply here. You’ll pay a flat rate of 15% or the progressive resident rates on your Singapore-derived income — whichever is higher.
Other forms of non-resident income like pensions, rental income, and directors’ remuneration attract a tax rate of 22%.
Various Tax Categories
Below are some of the most common types of taxes paid in Singapore:
Income Tax
Singapore offers some of the lowest income tax rates globally, making it an ideal location for high-income earners. Singapore tax residents pay a progressive rate of 0% to 22%, while non-tax residents pay between 15% to 22%.
Income tax is due on what you earned in the previous year. That means if you’re filing taxes for the Year of Assessment 2021, you’re paying taxes on income you earned from 1 Jan 2020 to 31 Dec 2020.
Here are the rates to expect:
| Taxable Income | Income Tax Rate (%) | Gross Tax Payable ($) |
|---|---|---|
| First $20,000 Next $10,000 | 0 2 | 0 200 |
| First $30,000 Next $10,000 | – 3.50 | 200 350 |
| First $40,000 Next $40,000 | – 7 | 550 2,800 |
| First $80,000 Next $40,000 | – 11.5 | 3,350 4,600 |
| First $120,000 Next $40,000 | – 15 | 7,950 6,000 |
| First $160,000 Next $40,000 | – 18 | 13,950 7,200 |
| First $200,000 Next $40,000 | – 19 | 21,150 7,600 |
| First $240,000 Next $40,000 | – 19.5 | 28,750 7,800 |
| First $280,000 Next $40,000 | – 20 | 36,550 8,000 |
| First $320,000 In excess of $320,000 | – 22 | 44,550 |
CPF (Social Security Tax)
The Singapore equivalent of pension or social security is the Central Provident Fund (CPF).
As an expat, you don’t need to make any CPF payments. But if you eventually decide to become a Permanent Resident, both you and your employer will have to start contributing to the CPF.
CPF contribution is only required if your monthly wages are above $750. When you get your monthly paycheck, you’ll notice that the CPF contribution has already been deducted. Here are the rates:
| Employee Age | From Employer (% of wage) | From Employee (% of wage) | Total (% of wage) |
|---|---|---|---|
| 55 and below | 17 | 20 | 37 |
| Above 55 to 60 | 13 | 13 | 26 |
| Above 60 to 65 | 9 | 7.5 | 16.5 |
| Above 65 | 7.5 | 5 | 12.5 |
Capital Gains and Dividend Taxes
In Singapore, there are no taxes on capital gains, dividends or inheritance.
Still, these sales transactions become taxable when your primary purpose in buying and selling is to make profits. This applies mainly to traders and dealers.
Because of that, IRAS assesses the nature and source of your business income on a case-by-case basis. Your gains may be taxable if IRAS regards your activities as a profit-generating trade.
Property Tax
Property tax is a wealth tax that Singapore imposes on property ownership irrespective of whether the property is occupied or vacant. It applies to HDBs as well as private homes. As with income tax, you’ll pay a progressive tax rate on properties.
That said, even as a ‘wealth tax’ Singapore’s property taxes are very low — especially for owner-occupied property.
The higher property tax rates are mainly if you buy a property for investment purposes and have no intention of living there.
Stamp Duty
Stamp Duty is a tax on documents for immovable properties, stocks, or shares. These include documents such as:
- Lease and tenancy agreements
- Mortgages
- Share transfer documents
You’ll pay the stamp duty after both parties have signed and dated the document. The process is quick via the IRAS e-Stamping system.
It’s an offence in Singapore to use a document without paying the stamp duty. You can face a penalty of up to four times the original stamp duty.
For example, if you’re buying a property, you must pay Buyer’s Stamp Duty on the property’s value. Foreigners or Permanent Residents buying a property in Singapore must pay the Additional Buyer’s Stamp Duty.
Sellers of residential and industrial properties may be liable for the Seller’s Stamp Duty.
Motor Vehicle Taxes
On top of import duties, vehicle owners have to pay motor vehicle taxes. These taxes are meant to curb car ownership and road congestion. They include the various registration fees, excise duty, road tax, and special tax.
Estate/Gift Tax
There is no longer Estate duty for deaths occurring on or after 15 February 2008. Singapore does not impose a gift tax.
Tax Deadlines
If you’re considered a resident of Singapore, you need to file your Singapore tax return by April 15th each year. You get a slight extension (April 18) if you file online.
You won’t have to make payment immediately though. IRAS will calculate how much in taxes you owe and send you an official Notice of Assessment. These bills go out in batches so there isn’t an exact date you’ll receive them by, but you should look out for them from end-April onwards.
If you make less than $22,000 a year, you don’t need to file a Singapore tax return. Also, many employers in Singapore submit your salary information directly to IRAS, so you may not have to do the declaration yourself.
Tax Reliefs and Deductions
There are various forms of reliefs available for tax residents, like personal and spousal deductions. Your final tax bill will be lower based on the reliefs you qualify for. Some examples of reliefs include:
- Having a disabled sibling, spouse, or parent
- Taking care of your parents or grandparents
- Being a working mother
- Employing a foreign domestic worker
Double Tax Relief
Singapore has double tax relief treaties with about 100 jurisdictions. That means if you’re a Singapore tax resident, you won’t have to pay tax twice on the same income.
Deductions
You may be able to claim tax deductions on employment expenses you incurred throughout the year. These include:
- business expenses that your company did not reimburse
- costs incurred from managing your rental property
- charitable donations
- medical expenses
Your deductions may even bring you to a lower tax bracket (and consequently, be charged a lower tax rate) altogether.
Singapore’s low tax rates and various tax reliefs make it an attractive place for expats to work, encouraging investment and entrepreneurship in the country. Together with tips on how to save, living in Singapore can be affordable even for expats.
Read also: Tax Haven or Tax Hell? Lowest & Highest Income Taxes in Asia