Personal income tax in Singapore: Tax rates, deductions & filing

Items that are not taxable include bona fide redundancy payments, payments for restrictive covenants and benefits like medical insurance (as long as it is ... FormationCompanyregistrationPrivatelimitedcompanyTrademarkregistrationBusinesscomplianceCompanysecretaryCompanydissolutionVirtualCFOBPOservices(maritime)BPRservices(maritime)AccountingHR&payrollImmigrationEntrePassEmploymentpassLong-termvisitpassPersonalisedemploymentpassDependantpassPermanentresidencyCorporateadvisoryBusinessconsultingTaxadvisory&planningDuediligenceM&AsupportCorporatevaluationResourcesGuidesNews&insightsClientstoriesDownloadsAboutusCallustoday+6563728778ContactusServicesCorporateservices.GETTINGSTARTEDFormation.CompanyregistrationStructuringadvisoryBUSINESSENTITIESPrivatelimitedcompanyRepresentativeofficeINTELLECTUALPROPERTYTrademarkregistrationSTAYINGCOMPLIANTAdministration.Corporategovernance.CompanysecretaryCompanydissolutionVirtualCFOProcessagentBPOformaritimeBPRformaritimeAccounting.AccountingservicesTax.TaxcomplianceHRoutsourcing.PayrolloutsourcingHRadministrationWORK&OTHERPASSESEmploymentpassPersonalisedEPEntrePassViewall(6)STREAMLININGOPERATIONSAdvisory.BusinessconsultingTaxadvisory&planningCorporatevaluationDuediligenceM&AsupportSolutions.StartingupStartupnewbusinessin SingaporeStartupRegionalexpansionExpandbusinessintoSingapore&AsiaExpandOperationalsupportManage&growyourSingaporebusinessManageResourcesGuidesClientstoriesDownloadsNEWAboutusNews&insightsContactusFindyourAcclimeexpert.AcclimeGroupAustraliaCambodiaChinaChina–HongKongIndonesiaMalaysiaPhilippinesSingaporeThailandUSAVietnamHomeGuidesAccounting&taxPersonalincometaxinSingapore:Taxrates,deductions&filing.PostedinAccounting&taxStartreadingSharethisarticleContentsTaxableincomeIncomefromemploymentSharesandshareoptionsDirectorsfeesPropertyincomeInterestCapitalgainsDeductionsandrebatesSpecialtaxschemesLodgementofincometaxreturnTaxclearancecertificateIndividualTaxRatesConclusionContentsTaxableincomeIncomefromemploymentSharesandshareoptionsDirectorsfeesPropertyincomeInterestCapitalgainsDeductionsandrebatesSpecialtaxschemesLodgementofincometaxreturnTaxclearancecertificateIndividualTaxRatesConclusionSimilartothecorporatetaxregimeinSingapore,theindividualtaxregimeisveryattractive.ThepersonalincometaxinSingaporeiscurrentlyhighestwitharateof22%,whichcutsinatS$320,000oftaxableincome.TheaveragetaxrateuptoS$320,000is13.9%,withatax-freethresholdofS$20,000.Singaporehasaprogressivetaxsystem,wherelowerincomesaresubjecttoaverylowtaxrate.AnindividualneedstobeearningmorethanS$80,000beforetheirmarginaltaxratecreepsabove10%.TaxableincomeIndividualsaresubjecttotaxinSingaporeonlyoncertaintypesofincome:IncomefromemploymentIncomefromemploymentistaxableinSingapore.Taxableemploymentincomeincludessalary,bonuses,commissions,allowances(suchashousingorcarallowance)andanysalarypaymentmadeinlieuofnotice.Itemsthatarenottaxableincludebonafideredundancypayments,paymentsforrestrictivecovenantsandbenefitslikemedicalinsurance(aslongasitisavailabletoallmembersofstaffofthecompany),trainingtoupgradetheskillsofworkersandstafffunctions.SharesandshareoptionsWhenanemployeeisgrantedsharesinthecompanyaspartofaremunerationpackage,thevalueofthosesharesaretaxable.Whentherearenovestingrestrictions,thesharesaretaxableintheyearinwhichtheyaregranted.Iftherearevestingrestrictionsplacedontheshares,theindividualwillbetaxableonthevalueoftheshareswhentheyvest,eveniftheemployeeisnolongerworkinginSingapore.Anemployeewhoisgrantedshareoptionsbyanemployerwillalsobetaxedonanygainsorprofitsarisingfromtheexerciseoftheshareoptions.Thegainswillbetaxableatthetimetheoptionsareexercised.ForforeignemployeesinSingapore,thereisa deemedexerciserule whenthatemployeeleavesSingapore.Undertherule,theemployeeisdeemedtoreceivegainsfromtheunexercised/restrictedShareOptionsandunvested/restrictedShareswhichhe/sheownsatthetimehe/shestopsworkinginSingaporewiththeemployerwhograntedtheoptionsorshares.ThismeansifaforeignemployeechangesjobsandremainsinSingapore,thesharesandoptionsaretaxableatthattime.Nevermissanimportantdeadlinewithourdetailedcompliancecalendar.Getaclearpictureofalltheaccounting,taxandHRdeadlinesAvoidpenaltiesandlatefeesKeepyouraccountantsoraccountingfirmaccountableDownloadnowDirectorsfeesDirectorsfeesearnedfromacompanyresidentinSingaporearetaxable.DirectorsfeesreceivedbyaSingaporetaxresidentforbeingadirectorofaforeigncompanyarenottaxableinSingapore.PropertyincomeRentalincomefrompropertylocatedinSingaporeistaxabletoanindividual.Ifthepropertyissoldataprofit,thatgainisnottaxableascapitalgainsinSingapore.However,ifapersonregularlytradesproperties,the IRAS maydeterminethatabusinessisbeingcarriedonandtaxtheprofitsasnormalincome.InterestInterestincomereceivedfrombanksandapprovedfinancialinstitutionsisnotsubjecttotax.However,anyotherinterest,forexample,fromaloantoacompany,adepositwithanon-approvedfinancialinstitutionorinterestreceivedfromapawnshopwillbetaxable.CapitalgainsGainsfromthesaleofaproperty,sharesandfinancialinstrumentsinSingaporearegenerallynottaxable.However,gainsfromtradingtheseassetsmaybetaxableifthefrequencyoftradessuggeststhattheassetsareheldfortrading,nottoearnacapitalgain.DeductionsandrebatesEmployeescangenerallyclaimtaxdeductionsonemploymentexpenses whollyandexclusively incurredinearningtheirincome.Thiscoversexpensesnecessarytoemploymentsuchastravelexpensestoseeclients,entertainmentexpenses,subscriptions,etc.Receiptsfortheexpensesmustsupportanysuchdeductions.Expensesincurredinoperatingarentalpropertyaredeductibleagainsttherentalincomereceived.Suchexpensesincludeinterestincurredonanyloanusedtofinancetheacquisitionoftherentalproperty.CashdonationsmadetoanapprovedInstitutionofaPublicCharacter(IPC)ortheSingaporeGovernmentthatwillbenefitthelocalcommunityaredeductible,butnotallregisteredcharitiesareapprovedIPCs.DonationsthataremadetoacharitywithouttheapprovalofIPCarenottax-deductible.Thetaxdeductionisusually2.5to3timestheamountofthedonationmade.Otherreliefsarealsoavailabletoindividualtaxpayersintheformofrebates.Examplesarereliefsforgrandparentcarers,foreignmaidrelief,spouseandchildrelief.Ineachcaseofcarerrelief,thecaremustbegiventoachildwhoisaSingaporecitizen.Therearedetailedspecificationsastowhoqualifiesforeachofthesetypesofrelief.SpecialtaxschemesArearepresentativeschemeAsanincentiveforcompaniestobaseregionalexecutivesinSingapore,eventhoughtheydonothaveacompanysetupinSingapore,theAreaRepresentativeSchemewassetup.ToqualifyasanAreaRepresentative,theemployeemustsatisfythesefourcriteriabelow:Beemployedbyanon-residentemployer;BebasedinSingaporeforgeographicalconvenience;BerequiredtotraveloutsideofSingaporeinthecourseoftheemployee’sduties;andRemunerationispaidbytheforeignemployerandnotchargeddirectlyorindirectlytotheaccountsofapermanentestablishmentinSingapore.Theemployeewillonlybetaxedonsalaryearnedduringthedayshe/shewaspresentinSingapore.Iftheemployeespendsmorethan183daysinayearinSingapore,he/shewillbetaxedasaresident.Ifnot,theemployeewillbetaxedasanon-resident.Theemployeewillbetaxedat15%orresidentratesontheapportionedincome,whicheverishigher.SRScontributionsTheSupplementaryRetirementScheme(SRS)isavoluntaryplantoencourageindividualstosaveforretirementinadditiontotheirCPFsavings.TheschemeisavailabletoalltaxpayersinSingapore,eveniftheyareaforeigner.ContributionstoSRScanbeclaimedasataxdeduction.Investmentreturnsaretax-freebeforewithdrawal,andonly50%ofthewithdrawalsfromSRSaretaxableatretirement.Thelimittoannualcontributionsis$15,300forcitizensandpermanentresidentsand$35,700forforeigners.ThecontributionsmustbemadetoanapprovedSRSaccountwithDBS,OCBCorUOB.LodgementofincometaxreturnAnindividualmustfileanincometaxreturnifhe/shereceivesaletter,formoranSMSfromIRASinformingthemtodoso.Itdoesnotmatterhowmuchincometheindividualearnedinthepreviousyear.Alternatively,anindividualmayreceivealetterorSMSfromtheIRASadvisingthatataxreturndoesnotneedtobelodged.Thisisusuallybecausetheindividual’semployerisparticipatingintheautoinclusionschemewherebytheemployernotifiestheIRASoftheemploymentincomeofthatindividual.Evenifanotificationisreceivedbyataxpayer,theindividualmaychoosetolodgeareturnifhe/shehasadditionalincometodeclareordeductionstoclaimagainsttaxableincome.AnassessmentwillbeissuedsometimeinMayeachyear,advisingthetaxpayeroftheamountowing.Thisamountmaybepaidinonelumpsumorinstalmentsby Giro.Thereisnorequirementonemployerstodeducttaxpaymentsfromsalarypayments,soindividualsneedtoensuretheyhavesufficientresourcestosatisfytheirtaxbill.TaxclearancecertificateIfaforeignerleavestheemployofaSingaporecompany,theSingaporecompanymustobtainataxclearancecertificatefromtheIRASinrelationtothatemployee.Theemployermustalsowithholdanypaymentstotheemployeefromthedatethattheyaremadeawarethattheemployeewillceaseemployment.TheIRASwilladvisetheemployerandemployeeofthefinaltaxbilloftheemployee,whichremainstheliabilityoftheemployee.Totheextentthemoneywithheldbytheemployer(andremittedtotheIRAS)isinsufficienttomeettheoutstandingtaxliability,theemployeemustpay.IndividualtaxratesChargeableincomeIncometaxrate(%)Grosstaxpayable($)First$20,0000–Next$10,0002200First$30,000–200Next$10,0003.5350First$40,000–550Next$40,00072,800First$80,000–3,350Next$40,00011.54,600First$120,000–7,950Next$40,000156,000First$160,000–13,950Next$40,000187,200First$200,000–21,150Next$40,000197,600First$240,000–28,750Next$40,00019.57,800First$280,000–36,550Next$40,000208,000First$320,000–44,550Inexcessof$320,00022ConclusionIncometaxratesinSingaporedependsonyourresidencystatus;ifyouareapermanentresidentoraforeignerwhohasstayedinSingaporeformorethan183days,youwouldhavetopaytax.However,ifyoustayedinSingaporeforlessthan183days,youwouldbeexemptedfromtax.ManyconsiderSingaporeasatax-havencountryasthetaxratesareverylowcomparedtoothercountrieswhichresultsinanincreasedinterestinsettingupabusinessinSingapore.Additionally,therateofpersonalincometaxinSingaporeisoneofthelowestintheworld.IfyouneedanysupportoradviceabouttaxationforyouoryouremployeesinSingapore,don’thesitatetogetintouchwithAcclime.SharethisarticleOtheraccounting&taxguides.Outsourcingtheaccounting&financefunctioninaSingaporeholdingcompanyTaxincentivesforSingaporebusinessesAccountinginSingapore:IntroductionTaxationinSingapore:IntroductionCorporateincometaxinSingapore:Taxrates,incentives&deductionsUnderstandingcapitalgainstaxinSingaporeGoods&servicestax(GST)inSingapore:CompleteguideWithholdingtaxinSingapore:CompleteguidePersonalincometaxinSingapore:Taxrates,deductions&filingXBRLfilinginSingaporeNeedbusinesssupportinSingapore?Getafree30-minuteconsultationonoperatingandgrowingyourbusinessinSingapore.ContactusOtheressentialguides.FormationguidesViewguidesGovernanceguidesViewguidesImmigrationguidesViewguidesAcclimeSingaporePte.Ltd.UEN200501892EGetintouchwithus+6563728778Weareopen:Monday–Friday9am–6pm(UTC+8)EmailusServicesFormationGovernanceAccountingTaxHRoutsourcingAdvisoryCompanyAboutusNews&insightsContactusResourcesFormationguidesGovernanceguidesAccounting&taxguidesImmigrationguides©Acclime|PrivacypolicyChangelocation