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Taxation of Individuals in Singapore

Taxation of Individuals in Singapore

Updated on Friday 18th September 2015

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Taxation-of-Individuals-in-SingaporeThe personal income tax in Singapore

The income taxation system comprises two types of taxes: the individual income tax applied to natural persons and corporate income tax applied to companies in Singapore. Both types of taxes cover the incomes of individuals and companies earned inside and outside Singapore.

The individual income tax is paid on an annual basis and is applied progressively for Singapore tax residents. With respect to foreign individuals the personal income tax applied only those working in Singapore for less than 183 days within a calendar year. The Singapore progressive tax system was enabled in 2007.  The advantage of the Singapore personal tax is that any income earned from sourced located outside but received in the city-state are exempt from taxation. This principle has many advantages for foreign individuals whose resident countries have concluded double taxation agreements with Singapore.

For details about the city-state’s agreements for avoidance of double taxation you may refer to our Singapore lawyers.

Personal taxation of Singapore residents

With respect to the personal taxation of Singapore residents, tax residency must be established first. Singapore tax residents are:

  • - any Singapore citizen,
  • - holders of Singapore permanent residency permits,
  • foreign individuals who have worked for more than 183 days in Singapore.

Tax residents pay the personal income tax based on an assessment that establishes the chargeable income, which is why tax rates will vary. Singapore tax residents are also required to file personal tax returns if their annual income is above 22,000 SGD.

Personal taxation of Singapore non-residents

Foreigners will be taxed in Singapore as it follows:

  • - for personal incomes earned from employment and any other incomes, if the individual has spent between 61 and 182 days in a year in Singapore,
  • - for personal incomes arising from fees.

The personal tax rate applied to employment incomes is 15% or the progressive rate, while directors or consultants’ fees are taxed with 20%. Foreign individuals are exempt from paying the employment income tax if they have a short-term labor contract in Singapore.

For complete information about the progressive income tax rates, please contact our Singapore law firm.