Types of Taxes in Singapore for Residents, PRs, & Foreigners

Like other places worldwide, paying taxes is part of your life whether you like it or not. You may notice two types of taxes in Singapore: corporate income tax and personal income tax.

Corporate income tax is a percentage of income earned by a corporation doing business in Singapore and paid to the government. In contrast, personal income tax is deductions from your income earned in a year of assessment(YA) and collected by the government.

These two types of taxes form the primary revenue sources for the government and affect you in other aspects. You should know while living or working in Singapore.

Why do We Need to Pay Taxes?

An old saying says: tax and death are unavoidable in life. Focusing on the former here, you can better manage it wisely by using multiple approaches. Before this, knowing why you should pay taxes is the first step.

Taxes are the primary source of maintaining the government’s daily operations. According to laws, citizens, permanent residents, and foreigners working in Singapore are under obligation to pay taxes from income or earnings to maintain public expenditures like defense, infrastructures, and law & order.

The government also uses the taxes collected to reduce social inequality by offering education to people and social benefits to the unemployed. Besides, taxes paid to the authority are available to fund climate and environmental protection programs.

Read Also: How to Pay Income Tax Singapore

Current Tax Rates in Singapore

Corporate Income Tax

All companies are subject to a corporate tax of 17% of chargeable income regardless of income amounts. Chargeable income is a company’s taxable income (after deducting tax-allowable expenses) for a year of assessment(YA.)

Types of Corporations subject to taxes:

• A business entity registered or incorporated under the Company Act 1967 or current laws available in Singapore with the words, for example, “Pte Ltd” or “Ltd” included with a company’s name or,
• A company registers as a branch of a foreign company in Singapore or,
• A foreign company registers or incorporates in Singapore.

*A sole proprietorship or partnership business is not under the “a company” definition.

Personal Income Tax

Personal income tax depends on a person’s tax residency status comprising of the following types:

• A permanent resident or citizen usually residing in Singapore except for temporary absences or
• A foreigner staying or working in Singapore:
  • For at least 183 days during the previous calendar year
  • Continuously having been in Singapore for 3 consecutive years, with stay periods of less than 183 days in the first and/or third year or,
  • Foreign workers working in Singapore and straddling for at least 183 days over 2 calendar years, including physical presence before and after employment. The definition does not apply to company directors, entertainers, or professionals except for employees.

Persons meeting the criteria above are subject to progressive tax rates. A progressive tax scale charges more taxes over earners of higher income, with a maximum rate of 24% from YA 2024 onwards.

The following rate scale demonstrates progressive tax rates applicable to the respective income tiers available for YA 2024:

Employment income tax rates for non-residents or foreigners are subject to a flat rate of 15% or the progressive rate scale above, whichever amount is higher.

Types of Taxes in Singapore

Besides corporate and personal income taxes, you may have to pay various daily taxes. The following are essential items of the Singapore tax system:

Property taxes

Property tax is an annual levy on a property owner. The tax calculation is based on an estimated annual value (annual market rent) multiplied by a property tax rate. As a property owner, you must pay property tax whether the property is rented or not.

A property owner should file with the Inland Revenue Authority of Singapore and pays income tax if he receives income from the property. The tax collections will be available for funding infrastructure, healthcare & services, education, defense, and recreation.

Property tax rates

• Residential properties: The tax rates for owner-occupiers and non-owner-occupiers range from 0-23% to 11-27%, respectively.

• Non-residential properties: A flat rate of 10% applies to owners of commercial and industrial buildings.

Estate duty

The government canceled the tax on Feb 15, 2008.

Estate duty is a tax on the total market value of a person’s assets (cash and non-cash) at the date of his or her death. It does not matter if the person has a will or not, the assets are still subject to estate duty.

The deceased person’s assets, as a whole, are called an estate. For the majority of estates, there is no estate duty payable as various exemptions are provided.

Motor vehicle taxes

You should pay the vehicle tax if you buy a car in Singapore. 3 main types of motor taxes are:

• Additional Registration Fee(ARF): The ARF is a tax based on a car’s OMV(open market value.) For a car with an OMV below $20,000, the ARF is 100% of OMV. For a car with an OMV of $20,000 or above, the ARF is 140% of an OMV.
• Excise Duty: The tax is 20% of a car’s OMV.
• Goods and Services Tax(GST): It is a tax of 8% on a car’s total value, including the ARF and excise duty.

Customs and Excise Duties

Customs and excise duties are indirect taxes imposed on goods imported or manufactured in Singapore. Unlike direct taxes, such as personal income taxes, a customer only pays the tax when buying the goods.

Examples of customs and excise duties are liquor, tobacco products, and motor vehicles. A customer pays for 2 pricing parts: costumes or excise duties and a car price.

Goods and Services Tax(GST)

GST is mainly a sales tax on consuming goods and services locally. Some examples are:

• Food and beverages: Most meals, groceries, and drinks are subject to a standard GST of 8% nationwide.
• Services: The 8% GST also applies to services, except for financial services,  like education, transportation, healthcare, and entertainment consumption in Singapore.

Besides, most goods and services from other countries are also subject to the GST of 8% upon user purchase.

Stamp Duty

Stamp duty is a tax on transferring certain assets, such as shares, motor vehicles, real property, and intellectual property. Examples of stamp duties are:

• Property stamp duties: An indirect tax on purchases and sales of residential and commercial properties. The stamp duty is determined on a percentage of a purchase value and imposed on buyers and sellers.
• Transfer duty: A share transferor pays the duty when changing the ownership of a share of a Singapore company. The charge varies depending on a share’s value and the transferor’s nationality.
• Conveyance duty: Like transfer duty, a conveyance duty is chargeable upon ownership transfer of intellectual property or motor vehicles. The duty differs dependent on the transfer value.

Foreign Worker Levy

The foreign worker levy is a tax on employers hiring foreign workers other than Singapore’s citizens or permanent residents. The government uses the levy to regulate the demand and fair pay for foreign workers. Like other taxes, the foreign worker levy varies on occupations and nationalities.

Airport Passenger Service Charge(PSC)

The PSC is a charge levied on departing passengers at Singapore Changi Airport. Collected charges will be available for the development and maintenance of the airport. The current PSCs are S$16 for adults and S$12 for children. Besides, an airplane ticket includes the tax paid.

Capital Gains Tax

Capital gains are exempt from tax in Singapore.

Betting tax

2 types of gambling tax guidelines issued by the IRAS cover all gambling activities in Singapore:

• Gambling duty: A tax on the gross amount authorized betting operators receive; the levy varies by type of gambling activities.
• Sweepstakes duty: A tax of 10% on the prizes awarded by authorized sweepstakes promoters is chargeable to receivers.

Not all gambling activities are subject to taxes. For example, football pools and lotteries are exceptions to betting taxes. However, the activities are subject to taxes: casino gaming, horse racing, online gambling, sports betting, national lotteries, and other authorized sweepstakes promotions.

Singapore and Other Countries Taxes Compared

Here are the comparisons of tax features for a main country and a region and Singapore:

*A worker has to pay state level and federal income taxes.

Singapore has a corporate income tax rate of 17%, which is slightly lower than the federal income tax rate in the United States (21%) and the corporate income tax rate in Hong Kong (16.50%).

Singapore has a progressive personal income tax system with rates ranging from 0% to 24%. In the United States, both federal and state income taxes are progressive, with rates varying depending on income levels. Hong Kong also has a progressive personal income tax system with rates ranging from 0% to 17%.

Final Thoughts

Understanding the tax system is the best way to manage your tax bills. You can grasp a clear concept through the above illustrations of the Singapore tax types and handle well your tax matters.

Key takeaways

• Direct taxes include: corporate income tax and personal income tax.
• Indirect taxes comprise property tax, motor vehicle tax, customs & excise tax, goods and service tax, stamp duty, foreign worker levy, airport passenger service charge, and the betting tax.
• Estate duty and capital gains tax are exempt from tax.

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