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Paying Taxes in Singapore

Updated on Saturday 14th January 2017

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The Inland Revenue Authority in Singapore (IRAS) is the institution collecting the taxes imposed to  tax residents in SingaporeSingapore applies 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.

The video below presents the main taxes to be paid in Singapore:

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.

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 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.

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.

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.

 For additional information about the city-state’s tax system, please contact our Singapore consultants.

Comments

  • Cristina De A Salvador 2015-02-05

    Please, I would like to have a better idea of foreign investors from Brazil in Singapore and vice versa. Thanks a lot!

    Hello Cristina and thank you for your comment. Please feel free to e-mail us at office[at]lawyers-singapore.com for a personalized consultancy in regards to your request. We would be happy to help you!

  • Jenna 2017-02-16

    I would like to know more about the taxation of dividends if I am a foreign businesswoman from Spain.

  • Ami90 2017-02-17

    Very useful information. I had an idea that Singapore was a good place to invest, seems ideal now looking at the taxes.

  • Brian 2017-02-20

    The updated version of the taxation system was of great help!

  • Corinne 2017-02-26

    I was looking for details about the taxation system in Singapore and I ran into your blog! Great article!

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