Singapore Fact-File Part 2:
Individual Business Domestic Taxation
2.12 Singapore Individual Business Other Taxes
Other Taxes
Singapore currently imposes an annual property tax
at a rate of 10%, based on estimated rental value, with a
lower 4% rate for owner-occupied properties.
However, from January 2011, a Progressive Property Tax Regime
(PPTR) is set to be put in place for the owners of residential
property, imposed at the following rates:
- 0% for properties with an annual value of less than 6,000
SGD;
- 4% for the next 59,000;
- 5% for annual values in excess of that amount.
The 10% rate will remain in place for residential properties
that are not occupied by their owners.
Stamp duty was abolished on the majority of financial instruments
in 1998, but remains in place on transactions relating to
stocks, shares, and immovable property, including both leases
and mortgages on the latter. It is imposed on an ad valorem
basis on leases on properties with annual values in excess
of SGD1,000, and on property purchases at:
- 1% on the first SGD180,000
- 2% on the next SGD180,000
- 3% on amounts in excess of that amount.
Where shares are sold or transferred, the rate is 20 cents
per SGD100 of the consideration or net asset value.
There are no significant environmental taxes in Singapore,
with the exception of a 30-45% water conservation tax.
Various taxes are imposed on motor vehicles, including import
duty at 31%, registration fees, and road taxes relating to
engine size. Additionally, drivers in Singapore must obtain
a Certificate of Entitlement permitting the use of a vehicle,
which is costly (with rates differing according to vehicle
type and engine capacity, and drivers required to bid for
certificates), as the initiative is designed to discourage
motor vehicle usage in Singapore.
Excise duties are payable on a relatively small number of
products, including motor vehicles, petrol and related products,
alcohol, and tobacco.
No estate duty has been payable since February 2008.
Businesses employing foreign workers must pay a Foreign Workers
Levy, the rate of which will vary according to the sector,
and whether the worker in question is skilled or unskilled;
the Ministry of Manpower gives further details on this here.
All employers must also pay a Skills Development Levy, at
a rate of 0.25% up to the first SGD4,500 of the employee’s
gross monthly remuneration.
Alternative Minimum Tax
There is no alternative minimum tax in Singapore.
Special income tax regimes for individuals in business
Non-resident taxpayers will pay at 15%, or at the resident
rate, whichever is the higher, although fees paid to directors
and consultants will generally face a 20% rate. The Inland
Revenue Service provides a tax calculator for non-resident
taxpayers to ascertain their liability here,
and further information on the various situations that may
arise for non-residents here.
Benefits are afforded under the ‘Not Ordinarily Resident’
scheme for certain expatriate workers, and with the primary
benefit being tax exemption on the portion of Singapore employment
income corresponding to time spent outside of Singapore on
business trips, as long as the worker in question has been
resident in Singapore for the two years prior to the year
of assessment, spends at least 90 days out of Singapore on
business, and has total Singapore employment income of SGD160,000.
Pre-assignment income remitted to Singapore is also exempted,
as is the employer’s contribution to a non-mandatory overseas
pension fund or social security scheme.
However, these benefits do not apply to directors’ fees,
which are taxable in full, and as the scheme is primarily
directed at not ordinarily resident employees, it
is likely to be of limited interest to self-employed expatriates
and business owners.
Since 2005, an incentive scheme has been in place for incorporated
start-ups. If a business is incorporated in Singapore, is
tax resident for the years of assessment in question, and
has no more than 20 shareholders (where all of the shareholders
are individuals beneficially and directly holding the shares
in their own names, or at least one shareholder is an individual
shareholder, with a direct holding of at least 10% of the
issued ordinary shares of the company), it can benefit from
a 100% tax exemption on the first SGD100,000 of its chargeable
income for the first three consecutive years of assessment
(and since 2008, a further 50% exemption on the next SGD200,000
for those years.
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