Singapore economy is based on free enterprise, with no restrictions on foreign ownership of business. The repatriation of profits and the import of capital are freely allowed. Singapore has a low corporate tax rate of 17% with effect from year 2009 (or YA2010) onwards compared to other leading economies in the world. A company is taxed at a flat rate on its chargeable income and capital gains are not taxable. It includes 4 main types of tax, namely, Corporate Income Tax, Personal Income Tax, Goods and Services Tax and Property Tax.
Features of Corporate Income Tax
ⓐ The Singapore tax system is territorial. Income tax is levied on the net income of companies from sources within Singapore and on foreign source income if remitted into Singapore. Non-resident Singapore companies and businesses are taxed on the same basis.
ⓑ Singapore has tax treaties for the avoidance of double taxation with more than 60 countries.
ⓒ One-tier corporate tax system that results the income tax payable on the normal chargeable income of a company is a final tax and shareholders will not be taxed on such dividend income.
ⓓ a person (known as the payer) who makes payment(s) of a specified nature (e.g. Royalty, Interest, Technical Service Fee, etc.) to a non-resident company or individual is required to withhold a percentage of that payment and pay the amount withheld (called 'Withholding Tax') to IRAS.
ⓔ No levy of withholding tax on dividends.
ⓕ There is no capital gains tax imposed in Singapore.
ⓖ Tax losses can be carried forward and set off against future tax profits*.
ⓗ Filing of Income Tax Return will not later than 30 November (for Paper Filing) or 15 December (for e-Filing) of each year.
Corporate Tax Rates
ⓐ Overall company tax rate is a flat 17%
ⓑ Tax Exemption Scheme for new start-up companies*
▷ New Singapore companies to enjoy zero tax on the first chargeable income of S$100K and approx. 5.7% effective corporate tax rate for next chargeable income of S$200K for the first 3 consecutive years.
ⓒ Partial Tax exemption for existing companies
▷ All resident companies to enjoy approx. 8.7% effective corporate tax rate on chargeable income for up to S$300K.
ⓓ Corporate Income Tax (CIT) Rebate*
▷ For YA2019, companies will be granted a 20% CIT rebate capped at S$10k per YA (YA2018: 40% capped at S$15k per YA)
*According to Yearly Budget Announcement from Singapore Government
Features of Personal Income Tax
ⓐ All income derived from Singapore is liable to tax. With effect from 1 January 2004, all overseas income remitted by individuals to Singapore is not taxable, except for those as follow:
▷ It is received in Singapore through partnerships in Singapore.
▷ Individuals’ overseas employment is incidental to Individuals’ Singapore employment. That is, as part of the work in Singapore, one needs to travel overseas.
▷ Individuals are employed outside Singapore on behalf of Government of Singapore.
You have a trade/business in Singapore and you are carrying on a trade/ business overseas which is incidental to your Singapore trade. You received service income from overseas, unless the income qualifies for exemption. For details, please refer to Tax Exemption for Foreign-Sourced Income.
Should your gains from your overseas employment be taxed in the foreign country, you may apply for double taxation relief, to avoid being taxed twice on the same income.
ⓑ Individuals are either “resident” or “non-resident” in Singapore tax purposes. Generally, a person is resident if he or she is physically present or exercises employment in Singapore at least 183 days in a calendar year or continuous period of at least 183 days straddling two years or continuously for three consecutive years.
ⓒ Regional representatives based in Singapore and employed by the representative office of an overseas company may be taxed concessionally on income pro-rated based on days spent in Singapore provided certain requirements are met. However, benefit-in-kind provided in Singapore are fully taxable.
ⓓ Regional representatives based in Singapore and employed by the representative office of an overseas company may be taxed concessionally on income pro-rated based on days spent in Singapore provided certain requirements are met.
ⓔ Income derives from short-term employment of 60 days or less is exempted from tax.
ⓕ 60 days rule does not apply to a director of a company, a public entertainer or exercising a profession in Singapore. Professionals include foreign experts, foreign speakers, queen’s counsels, consultants, trainers, coaches etc.
ⓖ When a foreigner’s contract for work is about to end or decide to work for another company or plan to leave Singapore for more than 3 months, the employer must inform Inland Revenue Authority of Singapore (“IRAS”). To ensure the foreigner pay all taxes before departure from Singapore, the employer is require to withhold payment of all monies (including salary, bonus, overtime pay, leave pay, allowances, gratuities, lump sum payments, etc.) due to you from the day you gave notification of your intention to leave the job or depart from Singapore.
Personal Income Tax Rates
ⓐ Personal income is taxable at progressive resident rates from 0% to 22% with effect from YA2017 (0% to 20% from YA2014 to YA2016) and entitled to claim certain personal reliefs. The chargeable income of first S$20,000 is axed at zero value.
ⓑ The employment income of non-residents is taxed at flat rate of 15% or the progressive resident tax rates, whichever is a higher tax amount. Director’s fee, consultation fees and all other income are taxed at 22% with effect from YA2017. This is to maintain parity between the tax rates of non-resident individuals and the top marginal tax rate of resident individuals.
Effective Year of Assessment (YA) 2017, director's fees, consultant's fees and all other income are generally taxed at 22%.
ⓒ Non-resident individuals will not be entitled to tax reliefs. However, ones can opt for Section 40 Relief to reduce the overall
Singapore tax burden. The qualifying conditions as follow:
▷ A non-resident Singapore citizen; or
▷ A non-resident deriving pension income from Singapore; or
▷ A non-resident residing in the Netherlands (Reciprocal relief is provided under the Singapore-Netherlands Tax Treaty)
ⓓ The Section 40 Relief will be computed automatically by IRAS once there is an indication of claim for Section 40 Relief by crossing the box in the Non-Resident Individuals Tax Form M.
Features of GST
ⓐ GST is broad-based consumption tax levied on the import of goods, as well as supplies of goods and services in Singapore (In other countries, GST is known as the Value-Added Tax or VAT).
ⓑ GST exemptions apply to the provision of most financial services, the sale and lease of residential properties, and the importation and local supply of investment precious metals. Goods that are exported and international services are zero-rated.
ⓒ Goods sold or services performed in Singapore are taxable.
ⓓ The only exceptions are financial services or the sale or lease of residential properties which are exempt supplies.
GST Rates & Registration
ⓐ GST is currently charged and accounted at a rate of 7% on the value of supply.
ⓑ All Singapore companies with annual turnover exceeding S$1 million are required by law to register for GST.
ⓒ Companies with annual turnover of less than S$1 million may choose to register for GST voluntarily.
ⓓ Companies need to apply for GST registration within 30 days of the date which their registration liability arises.
Features of Property Tax
ⓐ Property tax is a tax on property, payable by whoever that has a legal or beneficial interest in the property. Usually individual or company name is included in the valuation list as the “owner”.
ⓑ Property owners are liable to pay property tax on HDB flats (public flats from government), private residential property and commercial/industrial property.
ⓒ Rental income received from the letting of property in Singapore is subject to income tax, while the letting property is subject to property tax. The rental income includes rent of the premises, maintenance, furniture and fittings. After deductions for allowable expenses(such as property tax), the net amount is taxable.
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