Personal income tax residents in Singapore pay tax at some of the lowest individual income tax rates in the world. This means that for those of you who enjoy a high employment income, investment income, or chargeable income, there are few places on the planet better to be.
That said, while Singaporean tax residents pay attractive progressive resident tax rates, the income tax outlook in the city-state is a little complicated, and it’s important to properly understand not only income tax rates but the various personal reliefs and tax residency rules that apply.
In this article, Loan Advisor runs through everything you need to know about Singapore income tax rates, tax filing procedures, tax exemptions, and a whole lot more.
What Is Personal Income Tax?
Singapore personal income tax applies to various types of income, such as employment, business, and rental income. It is also dependent on an individual’s tax residency status. As a general rule of thumb, Singapore operates progressive resident tax rates ranging from 0% to 22% for income above S$320,000. But your gross tax payable will vary according to whether you qualify as:
- A Singapore tax resident
- Non-resident individuals
Beginning in 2024, Singapore plans to implement an enhancement in its headline personal income tax structure, raising the top tier to 24 percent. This means individuals earning S$500,000 to S$1 million will have a tax rate of 23%. Any chargeable income exceeding S$1 million will be subject to the new maximum rate of 24 percent.
Are there Tax Exemptions?
Singapore residents earning an annual income of less than S$20,000 do not need to pay taxes. Additionally, certain types of income, such as certain foreign-sourced income and tax-exempt dividends, may be exempt from personal income tax in Singapore. Lastly, various deductions, reliefs, and rebates can help reduce your taxable income and the amount of tax payable.
To claim these benefits, you must meet specific criteria and comply with the tax filing deadlines. It is essential to familiarize yourself and stay up-to-date with the Singapore tax authorities’ guidelines to make the most of the available exemptions and deductions.
Income Tax Rate for EP Holders in Singapore
The employment income of non-residents is taxed at a flat rate of 15% or the resident rates whichever results in a higher tax amount. Director’s fees, rental income, pension, and other income are taxed at the prevailing rate of 22%.
(Source: IRAS)
How Is It Calculated
Personal Income Tax Rates for Singapore Residents
As a resident or non-resident in Singapore, it’s essential to understand how income tax rates are calculated. In 2023, resident individual income tax rates are progressive, starting at 0% and capped at 22% for annual incomes above S$320,000.
Let’s assume an individual has a taxable income of S$40,000 for the year of assessment 2023.
- The first S$20,000 is taxed at 0%. So, the tax is 0.
- The next S$10,000 is taxed at 2%. So, the tax on this portion is S$10,000 * 0.02 = S$200.
- The remaining S$10,000 (S$40,000 – S$30,000) is taxed at 3.5%. So, the tax on this portion is S$10,000 * 0.035 = S$350.
The total tax would then be the sum of the taxes calculated at each level, which is S$200 + S$350 = S$550.
So, a Singapore resident with a taxable income of S$40,000 would owe S$550 in taxes for the year of assessment 2023, based on the progressive tax rates applicable up until 2023.
Note that for the upcoming Year of Assessment (YA) 2024, the top marginal tax rate will increase to 23% for chargeable income in excess of $500,000 up to $1 million, and 24% for income above $1 million.
To estimate your income tax liability as a resident in Singapore, you may use the IRAS income tax calculator.
Personal Tax for Singapore Non-Residents
Non-residents are subject to different tax rates when it comes to personal income tax in Singapore. Unlike residents, non-residents:
- Pay a flat 15% on employment income;
- May not enjoy tax reliefs and rebates;
- Are subject to a withholding tax of 22% on certain types of income, such as director’s fees, rent, and professional fees.
Let’s assume that Mr. Kim, a South Korean national, worked in Singapore from Aug 2022 to Oct 2022. His total salary amounted to S$21,000. His net tax payable for the year of assessment 2023 is S$3,150 (S$21,000 * 0.15).
As a non-resident, it’s important to familiarize yourself with the specific tax treatment applicable to your income sources, ensuring accurate and timely tax compliance.
Filing Personal Income Tax Returns
In Singapore, you’re required to file your personal income tax returns for the Year of Assessment (YA) 2023 starting from 1 March 2023. Make sure to stay well-informed about the filing process, deadlines, and applicable income tax rates to ensure a smooth and hassle-free experience.
Which Tax Forms Do You Need to Complete?
IRAS requires different types of taxpayers to complete different types of tax forms when filing their taxes. Your unique tax situation will depend on your occupation and tax residency status, so before you get started, you should double-check with IRAS here which rules apply to you.
Under most circumstances, you’ll need to file one of the below forms:
- Form B1 – for Employed Individuals
- Form B – for Self-Employed Individuals
- Form M – for Non-Resident Individuals
Don’t forget that if you earned less than $22,000 in the previous tax year, you will still be required to submit a tax return – you just won’t be charged a tax bill.
To file your income tax returns, log into the myTax Portal using your Singpass. If you’re a non-resident, you will still need to file an income tax return if you derived income from Singapore in the preceding year, regardless of the amount you earned.
To help with filing, consider using resources such as the e-filing guide provided by the Inland Revenue Authority of Singapore (IRAS). This step-by-step guide will assist you in navigating the online filing system and ensure that you input all the necessary information correctly.
Keep in mind the following key points while filing your personal income tax returns in Singapore for YA2023:
- Familiarize yourself with the applicable tax rates and reliefs.
- Ensure you file your tax returns by the deadline.
- Utilize available resources to assist in the filing process.
Following these guidelines and staying up-to-date on the latest tax information will help make the process of filing your personal income tax returns in Singapore a straightforward and stress-free experience.
Tax Treatment of Income Earned Overseas
Unlike many other countries, Singapore does not levy any taxes on foreign-sourced income, including when you receive employment income from overseas employment into a Singapore bank account.
That said, there are a few circumstances under which foreign income or overseas income received is still subject to personal taxes in Singapore.
Taxable overseas income includes:
- If the overseas income is received through partnerships in Singapore
- If you travel or work outside of Singapore as part of a Singapore-based role, the employment income you receive will constitute taxable income.
- If earned overseas or in a temporary location that doesn’t qualify as a “fixed place of operation”, any income earned via professional, tech, or consultancy services is taxable, too.
- You are employed overseas on behalf of the Singapore Government.
Tax Treatment of Employer Benefits
In Singapore, certain employer benefits are subject to income tax, and it’s essential for you to know how these benefits are taxed. For the Year of Assessment (YA) 2023, the progressive individual income tax rates start at 0% and go up to 22% for income above SGD 320,000 source.
Some common employer benefits that may be taxed include:
- Housing benefits: If your employer provides you with free or subsidized housing, the benefit is considered taxable income. The taxable value is the higher of the actual rent paid by your employer or the annual value of the housing, less any rent paid by you.
- Car benefits: If your employer provides you with a car or a car allowance, the benefit is considered taxable income. The value of the car benefit depends on the car’s annual value and the extent to which it is paid for by your employer.
- Stock options and share awards: When you receive stock options or share awards from your employer, these benefits may be taxable. The taxable value is generally the difference between the market value of the shares and the price you paid for them, if any. You should report these benefits in your tax return for the relevant YA.
Here are other examples:
Fully Taxable Benefits
- Bonuses
- Car allowances or benefits (unless it’s a company vehicle used for business purposes)
- Accommodation provided or housing allowance
- Reimbursement of personal expenses
- Stock options (taxable at the point of exercise)
Partially Taxable Benefits
- Medical expenses: Only hospitalization and surgical expenses are exempted. All other medical expenses are taxable unless they are incurred due to work-related accidents.
Non-Taxable Benefits
- Job-related allowances, such as transport allowances for business-related travel
- Official business expenses, including travel and entertainment expenses incurred while conducting company business
- Staff welfare expenses (e.g., money spent on company outings, dinners, or in-house training)
- Dental benefits are generally not taxable unless the benefit is in the form of a fixed allowance.
Make sure to keep track of these benefits provided by your employer, as you must report them along with your other income when filing your income tax return. By being aware of how these benefits are taxed, you can ensure that your tax filings are accurate and that you comply with Singapore’s tax regulations.
Read Also: SRS account
Capital Gains Tax, Inheritance Tax, Estate Duty
Capital Gains
In Singapore, capital gains are not subject to a specific tax. When you sell an asset, such as stocks, property, or other types of investments, any profit you make is generally not taxable as capital gains. This is advantageous for you as an investor, as it allows you to keep more of your gains when buying and selling assets. However, it’s always a good idea to monitor any regulatory changes that may affect taxation in the future.
Inheritance Tax
On the other hand, inheritance tax, also known as estate duty in Singapore, used to be charged on the total market value of a deceased person’s assets, but it was abolished in 2008. This means that when you inherit property or other assets from a deceased person, you are generally not required to pay inheritance tax.
The removal of this tax is intended to make Singapore a more attractive destination for wealth management and estate planning.
Estate Duty
Estate Duty is a tax levied on the total market value of a person’s assets (known as the estate) at the date of the person’s death. However, there is no Estate Duty in Singapore.
It was abolished for deaths on and after 15th February 2008. The move was part of Singapore’s efforts to attract high-net-worth individuals to live, work, and invest in the country, by creating a conducive tax environment.
As a result, the value of the deceased’s assets can be transferred to their beneficiaries without any Estate Duty. This includes all assets:
- Real Estate
- Cash And Bank Deposits
- Investments
- And Other Personal Items
Frequently Asked Questions (FAQs) About Income Tax and Taxes in Singapore
1. How Much is Personal Income Tax in Singapore?
Income tax rates in Singapore are dependent on your tax residency status and your income. The amount you’ll ultimately pay is influenced by numerous factors, such as whether you are a tax resident or not, how much you earn per year, and what kind of tax relief you will be claiming.
2. What is the Singapore Income Tax Rate for Personal Income Tax?
In Singapore, personal tax rates range from 0% to 22% for those with tax residency status. For non-residents, you’ll pay a flat rate of between 15% and 22%. Your individual tax liability and the rate you will ultimately pay are dictated by your income, expenses, and personal circumstances.
3. What Are Common Income Tax and Personal Tax Filing Mistakes?
The most common mistakes Singaporeans tend to make when filing their tax returns include incorrect income declarations, incorrect document submissions, incorrect deduction claims, and incorrect CPF contribution claims. Be sure to always double-check your return prior to filing.
4. What are Singapore’s Personal Tax Returns and Personal Income Tax Filing Deadlines?
You’ll need to submit your tax return to IRAS by 15 April if you are filing by paper, or by 18 April if you are filing your return online. It’s important to submit on time if you wish to avoid incurring a penalty.
5. Do Self-Employed Singaporeans Need to File Taxes?
Yes – if you are self-employed, you’ll need to declare your business income to IRAS once a year. It’s important to keep detailed records of your accounts and business transactions and to attach invoices, receipts, and other supporting documents to your tax return at the point of filing. This is especially true if you have selected automated filing – you’ll want to double-check your return pre-submission just to be on the safe side.
Conclusion
Getting to grips with personal taxes in Singapore is no easy task. The amount you’ll ultimately pay when you come to file your annual return will depend on your residency status, local and overseas income, and much more, so it’s important to properly understand your unique tax situation and the various reliefs available to you.
Key Takeaways:
- A progressive resident tax rate applies in Singapore, which starts at 0% and ends at 22% for higher earners making above S$320,000 per year.
- Non-tax residents have a slightly different status to a Singapore Permanent Resident or citizen. Instead, foreigners living in Singapore are taxed at a rate that can range from 15% to 22%.
- At the time of writing, Singapore does not levy taxes on capital gains, dividends, or inheritance.
- Foreign-sourced income is usually exempt from taxes levied by IRAS, though there are a few small exceptions to this rule – so make sure you’re aware of these.
- It’s important to submit your tax return in good time to avoid any penalties and to take full advantage of the various reliefs that may be available to you.
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