Singapore Personal Income Tax Guide for Locals and Foreigners

 

If you earn any form of income exceeding the individual tax-break threshold of S$20,000 per annum in Singapore, chances are you're obligated to pay some form of Singapore income tax. Whether you are a local or foreign employee, or being self-employed engaging in some form of freelancing, it is important to familiarize yourself with the personal income tax Singapore regulations set by the Inland Revenue Authority of Singapore (IRAS). The last thing you wanted is tax-related queries from IRAS during the tax season due to ignorance or negligence.

In this guide, we provide a comprehensive summary of tax-related matters individuals shall pay attention to.

Singapore Personal Income Tax Regulations at a Glance

  • Singapore follows a progressive personal income tax procedure wherein the personal income tax rate starts from 0% to 22% on income above S$20,000. Note: Starting from YA 2024, the top marginal Personal Income Tax will be increased from 22% to 24%.

  • For non-tax residents, the income tax rate varies from 15% to 22%. Note: Starting from YA 2024, the income tax rate for non-tax residents will vary from 15% to 24%.

  • Individuals need not pay any inheritance tax or capital gain.

  • Singapore levies tax only on the income earned in the country. Apart from a few exceptions, overseas income is exempted from taxation.

  • The tax regulation in Singapore varies according to the tax residency of an individual. 

  • Every year the due date of tax filing is 15 April (18 April if filed electronically), failing which can lead to penalties.

  • The Income tax is assessed on a preceding year basis.

Primary Difference in Personal Income Tax between Employee vs Self-employed

Personal tax varies for employed and self-employed individuals in Singapore according to the tax regulations set by IRAS. It is important to know where you lie. So, which are you?

  1. Employees: In Singapore, an individual who is serving a contract of service is considered an employee. This means that the person is entitled to receive a regular salary and incentives and is under the rule of an employer.

  2. The self-employed: A self-employed individual in Singapore is the one who offers services to others, works for himself, and earns taxable income. Under this category, there are freelancers, hawkers, baby sitters, direct sellers, traders, agents, etc. Hence, a self-employed can either be the sole owner of their proprietorship or have a partnership in business. (More about common types of business entities in Singapore here)

Determining Your Tax Residency Status – Why It Matters

Your tax residency status plays a pivotal role in determining whether an individual staying in Singapore is eligible for paying personal income tax.

  • Non-tax residents are taxed at a flat rate of 22% (except for Singapore employment income which is taxed at a flat rate of 15%, and some types of income are taxed at a reduced withholding rate)

    versus

  • Much lower progressive tax rates for tax residents

    • For instance, a Singapore tax resident with an annual income of up to S$100,000 would pay roughly 6% in effective tax rate.

Broadly, your tax residence is determined by your period of stay and the number of days you’re under employment in Singapore.

Tax Resident Singapore

You are classified as a tax resident if you stay or work in Singapore:

  • For at least 183 days in a calendar year

  • For at least 183 days for a continuous period of 2 years

  • Continuously for 3 consecutive years

In calculating your days of Singapore employment, weekends and public holidays are usually considered. Temporary absence from Singapore due to travels like vacation, leave, or business trips are also included.

As a Singapore tax resident, you will be:

  • Taxed on annual income earned in Singapore (taxable income)

  • Taxed on income after tax relief deductions (or any tax deduction) at progressive resident rates

  • Taxed on foreign sourced income brought in Singapore before 1st Jan 2007

Exempted from tax for foreign sourced income or individual income brought in Singapore on or after the 1st Jan 2007 as long as it is not received through partnerships in Singapore.

Sample tax resident scenarios

a) You are in Singapore for at least 183 days

You have stayed or worked in Singapore from 3 May 2021 to 6 Nov 2021, which sums up to 187 days. You will be treated as a tax resident for the 2022 Year of Assessment.

b) You are in Singapore for at least 183 days over 2 years

Year of Assessment Period of Stay Days in Singapore Tax Status
2020 4 Dec 2019 - 31 Dec 2019 27 Resident
2021 1 Jan 2020 - 9 Jun 2020 160 Resident

You have stayed or worked in Singapore for an ongoing period, between 4 Dec 2019 and 9 June 2020, which makes up to 187 days. You will be treated as a tax resident for the 2 years under administrative concession. You remain a tax resident for the 2020 and 2021 year of assessment. i.e. both 27 and 160 days make up 187 days.

c)   You are in Singapore for 3 consecutive years

You have stayed or worked in Singapore for 3 years ongoing even if you were in Singapore for less than 183 days in the first and third year. You will be a tax resident for all the 3 years of the administrative concession. Consider you worked or stayed in Singapore from 4 Dec 2018 to 9 June 2020. You will be a tax resident for 2019, 2020, and 2021 years of assessment.

Year of Assessment Period of Stay Days in Singapore Tax Status
2019 4 Dec 2018 - 31 Dec 2018 27 Resident
2020 1 Jan 2019 - 31 Dec 2019 364 Resident
2021 1 Jan 2020 - 9 Jun 2020 160 Resident

Both 27, 364, and 160 days make up 551 days.

Non tax resident Singapore

Non-tax residents refer to individuals who have stayed and worked in Singapore for less than 183 days. A non-resident individual is required to file for income tax returns by filling out form M and failing to do so would incur a late penalty from IRAS. Business owners who manage their Singapore business remotely or frequently travel in and out of the city belong to this group. Oftentimes, a convenient option would be to outsource to a professional tax preparation services provider.

As non-tax residents:

  • You are only taxed on individual income earned in Singapore

  • You are not entitled to tax relief

  • Your employee income is taxed at a flat 15% personal income tax rate or the progressive resident rates, whichever is higher.

  • Other income earned from Singapore or directors fee is taxed at a prevailing non resident tax rate of 22%, set to be raised to 24% in YA 2024

Sample tax non-resident scenarios

Scenario One:   You have stayed or worked in Singapore for 60 days or less

Non-residents who exercise employment in Singapore for less than 60 days have an employment income tax exemption, i.e. your short-term employment is exempt from tax. However, in the case you are a Singapore company director, a professional, or a public entertainer you are not included in this category. If you are absent from Singapore due to matters that are incidental to your employment, resident tax rates would still apply to you, which means your total income including that earned for service given outside of Singapore is taxable.

Further illustrating the above scenarios:

i) Suppose you work and stay in Singapore in short-term employment for 60 days or less in a year:

Year of Assessment Period of Stay Days in Singapore Tax Status
2020 5 Nov 2019 - 31 Dec 2019 56 Non-resident
2021 1 Jan 2020 - 1 Mar 2020 60 Non-resident

ii) Suppose you stay and work in Singapore a short time because you have been extensively travelling overseas on business trips related to your employment in Singapore, your income earned including services given on your overseas trips is taxable in full.

Year of Assessment Period of Stay Days in Singapore Tax Status
2020 1 Jul 2019 - 31 Dec 2019

(Overseas business trips - 133 days)
(Present in Singapore physically - 50 days)
183 Resident
2021 1 Jan 2020 - 30 Aug 2020

(Overseas business trips - 192 days)
(Present in Singapore physically - 50 days)
242 Resident

Scenario two:   Employment of 61-182 days in a year

If you are a tax non-resident who works for 61-182 days in a year in Singapore, you are not entitled to income tax reliefs. Your employment income will be taxed at the non-resident rate of 15%, or the progressive resident rate, whichever is higher. Note a 22% tax on Directors Fee still applies.

Example

Year of Assessment Period of Stay Days in Singapore Tax Status
2021 4 Jul 2020 - 31 Dec 2020 180 Non-resident

Determining the tax resident status of individuals or companies has important implications. As a rule of thumb, if you are a frequent traveller, you may wish to clock your travel days and plan accordingly. For businesses, achieving tax resident status would also open up benefits such as exemptions to new start-up companies, or other benefits conferred under various double taxation agreements.

Difference in Income Tax Rates for Residents vs Non-Tax Residents

Is there a difference in taxes payable by residents versus non-tax residents? Yes you bet.

By now, you shall already know that:

  • If you are a Singaporean citizen, Singaporean permanent resident, or a foreigner who stays or works in Singapore for 183 days of a year or more, you are a Singapore tax resident.

  • If you are none of the above, you are a non-tax resident of Singapore and will be taxed at 22% flat rate (except for Singapore employment income which is taxed at a flat rate of 15%, and some types of income are taxed at a reduced withholding rate).

The below table gives a quick glance at how much tax you could expect to pay as a tax-resident individual versus a non-tax resident individual, rates from YA2017 onwards:

As you could conclude, being a tax resident yields significant advantage in lower taxes for most low-medium income earners. In general, if your personal income does not exceed S$320,000 – S$400,000 threshold, your local tax residence status could save you a decent amount of tax. If you are a frequent traveller, you may wish to take note of your number of days spent in Singapore.

The above calculations are derived from the below tax resident rates if you are interested in some numbers crunching.

Chargeable Income Income Tax Rate (%) Gross Tax Payable ($)
First $20,000 0 0
Next $10,000 2 200
First $30,000 - 200
Next $10,000 3.5 350
First $40,000 - 550
Next $40,000 7 2,800
First $80,000 - 3,350
Next $40,000 11.5 4,600
First $120,000 - 7,950
Next $40,000 15 6,000
First $160,000 - 13,950
Next $40,000 18 7,200
First $200,000 - 21,150
Next $40,000 19 7,600
First $240,000 - 28,750
Next $40,000 19.5 7,800
First $280,000 - 36,550
Next $40,000 20 8,000
First $320,000 - 44,550
In excess of $320,000 22

Tax Clearance – When would you need it and how to go about it

Tax clearance is the process whereby you settle all your taxes due, before the expiry of a contract for work, or when you decide to work for another employer, and lastly, in cases where you plan to leave Singapore for a period of more than 3 months. It’s the obligation of your employer to ensure you pay all taxes due before you go.

For instance – When you leave a current employer, your employer would notify IRAS in good time to calculate your tax liability up to your last working day. All tax liabilities that you owe will have to be settled before you leave Singapore or you move on to your new job.

Typically, the employer will fill up an IR21 form to be submitted to IRAS for tax clearance. The employer shall also withhold payment of all monies due to you from the day of resignation (including salary, bonus, overtime pay, etc) to account for taxes payable to IRAS.

After form IR21 is submitted, IRAS would determine your tax liability by looking into the income you earned in the year of departure and that of the preceding year which was not assessed. A tax clearance directive would then be sent to your employer who would remit the tax amount liable to IRAS. In cases where monies withheld are more than the amount payable stated in the tax clearance directive, the employer will release the balance to you.

Do remember for foreigners intending to leave the country, you will only be able to leave after all tax dues are settled. If your taxes are not settled, you will be stopped from leaving Singapore and in such instance, you will need a release letter from IRAS.

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