Both individuals and legal entities are taxed on all the profits they make in Singapore. The exceptions consist in the profits from the sale of capita assets in Singapore and certain earning made outside the city-state, among which trading and business activities, or professions. Singapore’s taxation system is made of several types of levies:
An estate duty was also levied in Singapore, but it was abolished in 2008.
It is very important to know that Singapore’s taxation laws provide for the concept of tax residency. In order to take advantage of the levies imposed by the Inland Revenue Authority in Singapore (IRAS), one must be a Singapore resident. With respect to foreign individuals, they can be treated as tax residents for the respective Year of Assessment (YA) if:
Companies must be registered in Singapore in order to be considered tax residents.
The personal income tax in Singapore is one of the lowest in the world because it is applied progressively. The Singapore personal income tax starts at 0% and reaches a maximum of 20%. The Singapore income tax is calculated based on tax residency and the chargeable income of the individual. Also, individuals are taxed only on the income they make in Singapore. The Singapore income tax is applied as it follows:
Companies in Singapore are levied the corporate tax at a 17% tax rate, which is the main reason the city-state keeps attracting foreign investors. In 1994, Singapore introduced the Goods and Services Tax (GST) that has a 7% rate. Withholding taxes apply to interests, royalties and rentals. However, withholding taxes may be reduced or deducted based on the numerous tax treaties Singapore concluded with other countries. For complete details about the taxation system and investment opportunities you can ask our lawyers in Singapore.
All income above 320,000 S$ is taxed at a 20% rate. Foreign individuals are applied a flat tax of 15%. These tax rates are available until the end of 2016. For the tax rates that will be implemented with the beginning of 2017 you can contact our law firm in Singapore.
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