Singapore Fact-File Part 2:
Individual Business Domestic Taxation

2.3 Singapore Individual Income Tax Rates and Bands

Income tax is payable by individuals in Singapore on income earned or remitted there. Resident taxpayers will pay at progressive rates up to 20% (with the upper rate imposed on income above SGD320,000).

Tax resident individuals are liable to tax on their chargeable income (total income, less employment expenses where applicable (less likely to be of interest to a self-employed person), certain charitable donations, and certain family-related, educational, and other personal reliefs. The Inland Revenue Service of Singapore provides further information on allowable deductions: http://www.iras.gov.sg/irasHome/page_ektid110.aspx .

Tax returns must generally be filed (with certain exceptions) either via a paper return or online, by April 15 or 18, respectively. A Notice of Assessment, or tax bill, will be sent, based on the tax return, by September, and the tax due must be paid (or arrangements must have been made for it to be paid) by one month following the receipt of the Notice of Assessment. If the tax is not paid, a 5% penalty is imposed, followed by an additional 1% 60 days afterwards, and a further 1% for each month that the tax remains unpaid (up to a maximum of 12%). For tax which still remains unpaid, employers or third parties holding money due to the taxpayer can be instructed to withhold and pay to the tax authority, legal action can be taken, and the person can be prevented from leaving Singapore until their tax liabilities are discharged.

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.

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.