In Singapore, the rates of personal income tax are among the lowest in the whole world. For you to determine your income tax liability in Singapore as a resident, you should first determine your tax residency as well as chargeable income amount before applying the rate of progressive tax to it.
The following are the key points of income tax for people in Singapore which includes:
- The rate of progressive tax in Singapore which starts at 0 percent and ends at 20% or above S$320,000
- The country has no inheritance tax or capital gains
People are only taxed on incomes earned within Singapore. Those income earned by these individuals while working overseas/ other countries are not subjected to any taxation barring the few exceptions.
- The Tax rules also differ and are based on people’s tax residency.
The Tax filing due date for citizens is on April 15 of every year and income tax is always assessed based on the preceding year basis.
The rates of personal income tax
Individuals living in Singapore are always taxed on the progressive tax rate. This means that filing the returns of personal tax is mandatory whenever your total annual income exceeds S$22,000. This means that you should not pay tax whenever informed by the Singapore tax department and they will submit your total tax return.
Different rules of income tax often apply differently in Singapore often depends on the individual’s tax residency status;
Personal Tax for the Singapore Residents
You will be considered a tax resident whenever you are:
- A Singaporean; or
- A Singaporean who permanently Resides and have established their permanent home; or
- A foreigner after staying or worked in the country for more than 183 days
How do you calculate personal tax for the Singapore non-residents?
First, you need to ensure that personal employment income is exempted from tax for the people staying in the country doing an employment not more than 60 days per year. In addition, the exemptions do not apply for the people with professions such as directors of companies, public entertainer or even exercising profession in the country. The professionals included are foreign experts, queen’s counsels, foreign speakers, consultants, coaches, trainers etc.
For those people staying within the country in between 61 and 182 days in one year, are taxed on all the income earned within Singapore. However, they may claim donations and expenses to save their income from tax. Nevertheless, they are never eligible to make any claim amount as personal reliefs in their incomes. The employment income is also taxed at 15 percent on progressive resident rate and they will always pay the higher amount between the values after doing the calculations. Most of the consultant fess, director feed, as well as other incomes are all taxed at 20 percent.
What is that tax treatment of the income earned overseas?
Generally, all the overseas income that Singapore received on the or after the 1 Jan 2004 is tax exempted. This includes the overseas income that is paid into the Singapore bank accounts. In addition, a citizen does not need to declare his or her overseas income, which is not taxable.
Here are the circumstances under which the overseas income may be taxable:
The income is received within Singapore through a partnership company in Singapore.
All the overseas employment/ income are incidental to personal Singapore employment. The above reason is part of the job why you don’t need to travel and work overseas if you want to save your income from tax.
When you have an employment outside the country on behalf of the Government of Singapore, you will always get tax exemptions. In addition, you should declare all the qualified taxable income earned overseas income under the employment income as well as other incomes that are applicable in the personal tax form.
Capital gains tax, estate duty and inheritance tax
Capital gains are investment income, which arises in the relation to the real assets, like property, financial assets (shares or bonds) as well as tangible assets like goodwill. In Singapore, these earns are never taxed.
Inheritance tax is another tax, which you need to pay whenever you die and it comes out of financial estate, which you have left behind. This is referred to as the Estate Duty in Singapore and it was abolished effective the year 2008.