The Inland Revenue Authority in Singapore (IRAS) is the institution collecting the taxes imposed to tax residents in Singapore. Singaporeapplies taxes to the following categories:
- – individuals;
- – companies;
- – trustees.
All individuals and companies carrying out activities in Singapore are taxed on all their profits, except from profits resulted from selling capital assets. Also certain foreign incomes received in the country will be exempt from taxation or benefit from reduced rates, based on Singapore’s double taxation agreements. When it comes to the taxation of Singapore citizens, the tax rates usually change every few years. The last time the Singapore tax base for the taxation of individuals was updated was at the beginning of 2016.
Applying taxes in Singapore
When it comes to individuals, the personal income tax depends on whether the person is a Singapore tax resident or not and on the income they make. This is also the main reason Singapore is a very attractive country for foreign businessmen and individuals coming to work here. Singapore tax residents are:
- – Singapore citizens;
- – holders of Singapore permanent residence permits;
- – foreigners working or living in Singapore for at least 183 days in the previous year.
Director of Singapore companies are not considered foreign workers and will be taxed differently. Our representatives in company formation in Singapore will provide you with more information about the taxation of executives.
All other individuals are considered non-residents will be taxed for a particular Year of Assessment. Non-residents will also be exempt from taxation if they have been working with a Singapore company for less than 60 days. If you would like to know more about these types of taxes in Singapore, our incorporation agents are at your disposal.
You can read about the main taxes in Singapore in the infographic below:
Tax rates available from 2017 in Singapore
The Singapore Inland Revenue Authority has also made available the new rates for the personal income tax from 2017 onwards, as it follows:
- a 0% rate for the first 20,000 SGD and a 2% rate for the following 10,000 SGD;
- a 0% rate on the first 30,000 SGD and 3.5% rate for the following 10,000 SGD;
- a 0% rate on the first 40,000 SGD and a 7% rate for the following 40,000 SGD;
- a 0% rate on the first 80,000 SGD and a 11.5% rate on the following 40,000 SGD;
- a 0% rate on the first 120,000 SGD and a 15% rate on the following 40,000 SGD;
- a 0% rate on the first 160,000 SGD and a 18% rate on the following 40,000 SGD;
- a 0% rate on the first 200,000 SGD and a 19% rate on the following 40,000 SGD;
- a 0% rate on the first 240,000 SGD and a 19.5% rate on the following 40,000 SGD;
- a 0% rate on the first 280,000 SGD and a 20% rate on the following 40,000 SGD;
- a 0% rate on the first 320,000 SGD and a 22% rate on any amount above it.
Taxation and tax exemptions for companies – presented by our specialists in company formation in Singapore
Companies with a management seat in Singapore will be imposed the corporate income tax which is levied at a flat rate of 17%. However, from 2017 startups and small and medium-sized enterprises (SMEs) benefit from partial tax exemptions and total tax exemptions, according to the new scheme presented by the IRAS.
The partial tax exemptions are granted as it follows:
- for the first 10,000 SGD deemed as chargeable income, the partial tax exemption granted is 75% of the amount;
- the following 290,000 SGD earned by a company will be granted a partial tax exemption of 50%.
When it comes to total tax exemptions, these apply for startup companies in Singapore which are granted a 100% rebate for the first 100,000 SGD and a 50% rebate for the next 200,000 SGD. Our team can give you more details about these tax exemptions and about the main types of taxes in Singapore and can also help you in the process of opening a company in Singapore.
Other taxes applicable in Singapore
While the personal and the corporate income taxes are the direct levies imposed to individuals, respectively businesses in Singapore, there are also other taxes applied to both categories of taxpayers. The Good and Services Tax (GST) is one of the most important taxes in Singapore and it is the equivalent of the VAT in European countries. The GST in Singapore is applied at a 7% rate, which is one of the lowest in Asia Pacific. EORI registration in Singapore is possible for companies seeking to trade in the European Union.
The other taxes to be paid in Singapore are:
- the stamp duty which is levied on the sale property;
- the stamp duty which is applied on the sale of shares in companies in Singapore;
- the property tax.
Special categories of taxes are the casino, the betting and the private lottery taxes which apply to gambling facilities in Singapore. Foreign companies operating in Singapore and remitting income in their home countries will be imposed withholding taxes on certain payments. However, these companies can use Singapore’s double tax treaties to avoid the withholding tax being levied twice.
Contributions of employers in Singapore
Employers, as well as employees, have to make contributions to the Central Provident Fund (CPF) if the persons who are hired are citizens of Singapore or permanent residents. Foreign employees – who are not permanent residents or citizens – and their employers do not have to contribute to the CPF. The employee’s contribution can be deducted from the taxable income and the employer’s contribution is exempt from taxation for foreign investors in Singapore unless the contribution surpasses the statutory limit.
The video below was created by our Singapore company formation agents and presents the main taxes in Singapore:
Taxable income for foreign investors in Singapore
Income in Singapore includes:
- gains or profits from an activity or profession;
- earnings from employment: is due to be derived from Singapore if the employment is exercised in the country (for example, if the services are implemented in Singapore), no matter where the remuneration is actually received. It includes wages, leave pay, fees, commissions, bonuses, gratuities, perquisites, allowances and benefits in-kind (for example, meals, clothes and housing provided by the employer). Our accountants in Singapore can provide more information on this matter;
- pensions and annuities.
Dividends resulting from payments from companies under the one-tier taxation system are exempt from taxes.
Individual inventors can receive an exemption of 90% on the gross income from royalties.
Interest income resulted from an individual form of money deposit in a standard savings, current or fixed deposit account with a recognized bank or finance corporation in Singapore is exempt from taxation.
Net rental income resulted from a property in Singapore is accumulated with other income and is subject to tax in Singapore.
Capital gains earned by an individual are not taxed, because Singapore does not tax capital gains.
For additional information about the taxes in Singapore or for details on how to open a company in this city state, please contact our company formation consultants.