Resident individuals deriving employment income and rental income is subject to
Singapore personal income tax at progressive rates up to 20%, based on the following progressive rates.
Singapore Personal Income Tax Rates for resident individuals:
Chargeable Income Tax Rate Gross Tax Payable ($)
First $20,000 0% 0
Next $10,000 3.50% 350
First $30,000 - 350
Next $10,000 5.50% 550
First $40,000 - 900
Next $40,000 8.50% 3,400
First $80,000 - 4,300
Next $80,000 14% 11,200
First $160,000 - 15,500
Next $160,000 17% 27,200
First $320,000 - 42,700
Above $320,000 20%
Singapore Personal Income Tax Rates for non-resident individuals: Employment income of non-residents are taxed at a 15% tax rate or resident rate, whichever gives rise to a higher tax amount. All other income of nonresidents sourced in Singapore, including directors' fees and consultants' fees, is taxed at a flat rate of 20%. A nonresident individual (other than a director) exercising a short-term employment in Singapore for not more than 60 days may be exempt from tax in Singapore.
A Singapore citizen is considered tax resident if the individual normally resides in Singapore except for temporary absences that are consistent with the claim to be a resident. A foreigner is considered resident in Singapore if the individual is physically present or exercises a Singapore employment for 183 days or more during the basis year.
Non-resident individuals exercising an employment in Singapore are subject to income tax depending on the number of days in Singapore. Employment income derived from short term employment (not more than 60 days) is exempt from Singapore income tax for the non-resident employee. This exemption does not apply to non-resident company directors, non-resident public entertainers or non-resident professionals including foreign experts, foreign speakers, queen's counsels, consultants, trainers, coaches etc. Nonresident employees exercising an employment in Singapore for a period of 61 - 182 days will be taxed at the higher of 15% (without personal tax reliefs) or the progressive resident rates (with personal tax reliefs). Non-residents deriving rental income are taxed at 20%.
Dividend income from Singapore companies, interest income from savings, current or fixed deposit accounts with approved banks or finance companies in Singapore and foreign-sourced income are tax- exempt for individuals (regardless of residency).
Filing status - Each individual is required to file a separate tax return, including married couples living together.
Taxable income - Income includes gains or profits from a trade or profession and earnings from employment (including the value of employer-provided food, clothing or housing and allowances other than for subsistence, transport, travel or entertainment).
Capital gains - Singapore does not tax capital gains.
Tax Deductions and allowances - Personal reliefs and tax rebates are granted only to resident individuals. Personal reliefs may be deducted against assessable income to ascertain chargeable income on which tax is then computed. Tax rebates are deducted from the tax payable to determine the final tax liability of the individual.
Other taxes on individuals:
Capital duty - No
Stamp duty - Same as for companies.
Capital acquisitions tax - No
Net wealth/net worth tax - No
Real property tax - Property tax, levied on all immovable property in Singapore, is payable annually by the owner at the beginning of the year. Immovable property includes Housing Development Board flats, houses, offices, factories, shops and land. The annual property tax is calculated based on a percentage of the gross annual value of the property as determined by the property tax department. The property tax is 4% for owner-occupied residential property and 10% for other property. A property tax exemption for land under certain development may be granted for certain cases.
Inheritance/estate tax -Estate duty has been abolished for deaths occurring on or after 15 February 2008.
Social security contributions - Only employees who are Singapore citizens or Singapore permanent residents are required to contribute to the CPF at a rate of 20%. Graduated rates may apply for the first 3 years when the employee first attains permanent residence.
Singapore Tax year - Singapore tax year is the calendar year
Filing and payment of tax - An individual is required to file his/her Singapore tax return in respect of income from the preceding year by 15 April of the following year.
Penalties - Penalties apply for late filing or failure to file.
The standard corporate tax rate in Singapore is 17%.
A partial tax exemption is given on first S$300,000 of the chargeable income (CI). Under this scheme, 75% of the first S$10,000 of CI is tax exempt and 50% of the next S$290,000 of CI is tax exempt:
Income Exemption Exempt amount
First $10,000 @ 75% $7,500
Next $290,000 @ 50% $145,000
Total $300,000 $152,500
The exemption does not apply to Singapore dividends received by companies enjoying a concessionary tax rate granted by a tax incentive and income of a non-resident company subject to a final withholding tax rate.
Qualifying newly Singapore-incorporated companies may enjoy a separate tax exemption scheme for its first three consecutive years of assessment. This scheme allows qualifying new companies to enjoy a tax exemption on the first S$100,000 of CI and on 50% of the next S$200,000 of CI:
Income Exemption Exempt amount
First $100,000 @ 100% $100,000
Next $200,000 @ 50% $100,000
Total $300,000 $200,000
Resident and non-resident companies are taxed on income accruing in or derived from Singapore as well as on foreign income remitted (actual or deemed) into Singapore. Remittance of foreign income (dividends, branch profits, services income) may be tax exempt when remitted by a resident company under certain conditions. A company is tax resident in Singapore if the management and control of its business is exercised in Singapore.
The tax year, referred to as the year of assessment (YA), runs from 1 January to 31 December of each year. Income for the YA is computed based on the income derived in the preceding calendar year (known as the basis year) from all sources. For a trade, business, profession or vocation with a non-31 December accounting year end, the Inland Revenue Authority of Singapore (IRAS) normally accepts the accounting year as the basis year instead of the calendar year. Under such circumstances, tax is assessed for each YA on the income for the accounting year preceding that YA.
A company is required to provide an estimate of its CI within three months after the end of its financial year. The estimated tax payable can be paid via instalments. The number of instalments available depends on when the estimated CI is filed within the three-month window period and on the method of filing. The annual corporate income tax return must be filed by 30 November of the YA. After the submission of the tax return, IRAS will issue a notice of assessment to collect any tax shortfall. The tax payment has to be paid within one month after the date of issue of the notice of assessment.
Stamp duty is levied on legal instruments relating to the sale, mortgage or lease of immovable property and the sale or mortgage of stocks and shares.
DETERMINATION OF TAXABLE INCOME
Singapore-incorporated companies are required to prepare their financial accounts according to Singapore Financial Reporting Standards (FRSs). The FRSs are closely modelled on the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The accounting profits are adjusted in accordance with Singapore tax rules to arrive at the taxable income.
Companies are required under FRS to prepare their financial accounts according to their functional currency. Those with non-Singapore dollar functional currency accounts are required to furnish their tax computations to the IRAS in that functional currency. Expenses must be incurred wholly and exclusively for the production of income in order to be tax deductible unless specifically disallowed or restricted (e.g. noncommercial motor vehicles, medical expenses, expenses of a capital nature). Special rules apply to expenses incurred by investment holding companies, companies that commence business activities during the financial year and expenses incurred in respect of foreign sourced income.
Interest is deductible to the extent it relates to funds borrowed for income-producing purposes. There are no thin capitalisation rules in Singapore.
There is no prescribed valuation methodology under the domestic income tax law. As such, IRAS will generally accept the valuation methodology under FRS.
CAPITAL GAINS AND LOSSES
There is no separate capital gains tax regime in Singapore. Gains of a capital nature are not subject to income tax. Similarly, expenses of a capital nature are not deductible for income tax purposes. IRAS will look at the facts and circumstances of the transaction to determine whether the gain is capital in nature or a trading gain which is subject to income tax.
Dividends paid by Singapore companies are exempt from tax in the hands of the shareholder from 1 January 2008. Foreign sourced dividends remitted into Singapore may be tax-exempt under certain circumstances.
Capital allowances, instead of accounting depreciation, are granted for plant and machinery acquired and used in a trade or business. Most plant and machinery qualify for three-year straight line tax depreciation. Low cost items (costing not more than S$1,000 per item) may be tax depreciated in full, subject to a total claim of S$30,000 for each YA. Certain equipment (such as computers, automation equipment, pollution-control equipment, energy-saving equipment) may qualify for 100% tax depreciation in the year of acquisition. Industrial buildings used for qualifying purposes can claim an initial allowance of 25% plus an annual allowance of 3%.
Current year unused capital allowances can be carried back (up to a total of S$100,000 for both unused capital allowances and unused tax losses) to the YA immediately preceding the YA in which the capital allowance arose. The unused capital allowances can also be carried forward indefinitely. The utilisation of unused capital allowances carried back or carried forward is subject to the business continuity test and the shareholding test. For the YA 2009 and YA 2010, the unused capital allowances (together with unused losses) can be carried back to the three YAs immediately preceding YA 2009 or YA 2010 and up to a limit of S$200,000.
The business continuity test requires the business/trade for which the capital allowances were granted to be carried on. The shareholding test requires that there is no substantial change (no more than 50%) in the ultimate shareholders and their respective shareholdings on certain dates.
Current year unused trade losses can be carried back (up to a total of S$100,000 for both unused capital allowances and unused tax losses) to the YA immediately preceding the YA in which the trade losses were incurred up. The unused tax losses can also be carried forward indefinitely. For the YA 2009 and YA 2010, the unused losses (together with unused capital allowances) can be carried back to the three YAs immediately preceding YA 2009 or YA 2010, as the case may be) and up to a limit of S$200,000.
The carry back/forward of tax losses is subject to the same shareholding test for the carry back/forward of unused capital allowances.
Singapore has a comprehensive list of tax incentives and development schemes to attract investments and to assist investors in expanding their businesses. Highlights of key incentives and schemes are summarised below.
The Regional and International Headquarters Awards encourages companies to use Singapore as a regional or global base. A customized package of tax incentives (such as Pioneer Incentive, Development and Expansion Incentive, Investment Allowances) and grants will be given to qualifying companies.
The Pioneer Incentive encourages the introduction and growth of new industries in Singapore. A pioneer enterprise is granted full income tax exemption on its qualifying profits for up to 15 years.
Investors undertaking projects that will generate significant economic benefits for Singapore may apply for the Development and Expansion Incentive. The incentive provides preferential income tax rates on all qualifying profits above a pre-determined base, for a set period.
Companies investing into new equipment that introduces new technology to the industry or contributes to its efficiency can apply for Investment Allowances. This is a capital allowance given to partially offset the costs of acquiring qualifying equipment within a set period and is in addition to the normal tax depreciation.
The Approved Royalties Incentive encourages companies to transfer their cutting edge technology and knowhow to Singapore by providing full or partial withholding tax exemption for royalty payments or technical assistance fees payable to non-residents. Investors looking into developing or bringing new R&D capabilities can apply for the Research Incentive scheme. The project should result in an increase of hiring and training of research scientists and engineers in Singapore. The scheme provides grants to partially offset the R&D project costs incurred for manpower training, equipment investment, intellectual property management and professional services.
The Local Enterprise Finance Scheme (LEFS) is designed to assist and encourage companies (with at least 30% local ownership) to upgrade and expand their operations. LEFS loans are available for factories, machinery and working capital.
The Local Enterprise Technical Assistance Scheme (LETAS) encourages and assists companies (with at least 30% local ownership) in seeking external expertise to improve their operations. Generally, assistance provided is up to 50% of the cost of engaging an external expert to implement quality management and IT systems (e.g. ISO certification, upgrading computer systems).
FOREIGN TAX RELIEF
Under Singapore's network of 60 comprehensive double tax treaties, Singapore will grant a tax credit for foreign tax suffered in the treaty country. The tax credit granted is limited to the lower of the foreign tax suffered and the Singapore tax payable on that income. Singapore also grants a unilateral tax credit for certain income derived from countries that have not entered into tax treaties with Singapore.
A corporate group (comprising of a Singapore-incorporated holding company and its Singapore-incorporated subsidiaries) can transfer current-year unused losses, unused capital allowances and unused donations within companies in the group. There is a 75% ownership requirement that need to be maintained to remain within the group.
RELATED PARTY TRANSACTIONS
IRAS issued transfer pricing guidelines for the first time in February 2006. The purpose of the guidelines is to give guidance on applying the arm's length principle and the recommended preparation and maintenance of documentation to demonstrate compliance with the arm's length principle. In February 2009, IRAS issued a supplementary guide to provide further guidance and application of the arm's length principle to related party loans and related party services.
Singapore is now in the process of legislating the arm's length principle for related party transactions in the domestic tax law. This will give the IRAS the basis for making adjustments if it is of the opinion that the arms length principle is not applied appropriately by the taxpayer
Interest, fees, payments in connection with any loan or indebtedness: 15%
Royalty or other payment for the use of movable property: 10% (final tax)
Payment for the use or right to use scientific, technical, industrial or commercial knowledge or information: 10% (final tax)
Technical assistance and service fees and management fees: Prevailing corporate tax rate (20% for individuals)
Rent or other payments for the use of movable properties: 15% (final tax)
Time charter fees and voyage charter fees, bareboat charter fees: Nil to 3%
Directors' remuneration/directors' fees: 20%
There is no withholding tax on dividends.
The standard GST rate in Singapore is 7%. The exportation of goods and the provision of international services are zero-rated. The sale and rental of residential properties and specified financial services are exempt from GST.
Goods and Services Tax (GST) is a broad base consumption tax aimed at taxing the final consumer of the goods and services. The supply of goods and services made in the ordinary course of business in Singapore by a GST registered person is subject to GST. The importation of goods into Singapore is also subject to GST.
Persons carrying on businesses making taxable supplies are required to register for GST if their annual turnover (retroactive or prospective) is more than S$1m. A GST registered person (GST taxpayer) has to charge GST on his supplies (Output GST) and pay GST on his purchases (Input GST). The GST taxpayer has to file a monthly or quarterly GST return to declare the Output GST collected and the Input GST incurred. He will pay (or claim) the difference (after netting the Output GST against the Input GST) together with the GST return.
GST Registration - A person is required to be registered if the total annual value of his/ her taxable supplies exceeds SGD 1 million. Companies may apply for voluntary registration even if turnover is less than SGD 1 million. However, once registered, the taxpayer must remain registered for at least 2 years.
Filing and payment of GST - A registered taxable person is required to furnish a tax return to the Comptroller not later than 1 month after the end of each 3-month accounting period. The amount of tax payable for the accounting period to which the return relates should be made together with the submission of the tax return.
Income Tax Rate
Corporate Tax Rate
Sales Tax / VAT Rate
Last Update: Nov 2010
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