Tax Treatment for Expats Living in Singapore

Q: What is Singapore's Tax Assessment Year?

Tax laws in Singapore are under the purview of the Inland Revenue Authority of Singapore (IRAS) . The IRAS defines the tax assessment duration for a particular year from January 1 through December 31 of that year. Let's take an example. If you are trying to calculate your taxes for the 2022 Tax Year of Assessment, you will include all of your income earned between January 1, 2022 through December 31, 2022.

Q: What Types of Tax Deductions can Singapore Residents and Non-Residents claim?

Singapore tax residents are entitled to various types of tax deductions on expenses, donations and personal reliefs . Tax residents may claim deductions for: Numerous personal reliefs that include Earned Income Relief, NSman Relief for self and spouse, Handicapped Relief for some relatives, Foreign Domestic Worker Levy Relief, and many more Personal tax rebates Numerous tax savings for married couples and families Parenthood Tax Rebate (PTR) Rental expenses Donations Self-employment, partnership, trade and business expenses Eligible employee expenses As for Singapore tax non-residents , they can only claim tax deductions on expenses and donations, but not on personal reliefs. Singapore tax residents can claim deductions for various expenses, donations and personal reliefs; non-residents are not allowed deductions on personal reliefs.

Send money overseas with WorldRemit to take advantage of bank-beating exchange rates

Published Dec 14, 2022

By RemitFinder

Are you an expat living in Singapore? Are you unsure about the tax treatment you should be expecting?

In this article, we provide details around the expected tax treatment for expats living in Singapore, as well as answers to some frequently asked questions. Read on get going, and remember to always consult with a tax consultant for professional advice.

An image of high rise buildings with the title - Tax Treatment for Expats Living in Singapore

About Singapore

Singapore is a sunny, tropical island located at the southernmost point of the Malay Peninsula in Southeast Asia. Five million people, mostly Chinese but also Malay, Indian, and Eurasian, live in the city-state, which is 710 square kilometers in size.

Despite its small size, Singapore is a major financial center and home to many multinational corporations. The country has been a parliamentary democracy since gaining its independence on August 9, 1965. President Halimah Yacob serves as the Head of State at the moment, while Prime Minister Lee Hsien Loong heads the government and cabinet.

The government of Singapore is a parliamentary republic, with the president serving as the head of state and the prime minister as the head of government. Singapore has a highly developed free market economy where there is no corruption, and the economy is open. Singapore is a participant in the Trans-Pacific Partnership, the Association of Southeast Asian Nations (ASEAN), and the Asia-Pacific Economic Cooperation (APEC) (TPP).

Singapore's open economic policy and corruption free governance, along with its strategic geographical location, have opened the doors to foreigners coming to study, work and settle in Singapore. Expats in Singapore earn money, and have to be aware of the tax laws applicable to them.

Singapore is an open, vibrant and corruption free economy, and many foreigners come to Singapore for various reasons.

If you are a foreigner living or working in Singapore, you will need to pay taxes on your income in Singapore. Before we delve deeper, first, let's ensure you know the definition of the Singapore tax year.

What is Singapore's Tax Assessment Year?

Tax laws in Singapore are under the purview of the Inland Revenue Authority of Singapore (IRAS). The IRAS defines the tax assessment duration for a particular year from January 1 through December 31 of that year.

Let's take an example.

If you are trying to calculate your taxes for the 2022 Tax Year of Assessment, you will include all of your income earned between January 1, 2022 through December 31, 2022.

Singapore tax year is from January 1 through December 31.

When are Singapore Tax Returns Due?

The Inland Revenue Authority of Singapore (IRAS) specifies that tax returns in Singapore need to be filed annually by April 15th.

Extending on our earlier example for the 2022 Tax Assessment Year, your 2022 tax return must be filed with the IRAS by April 15, 2023.

Do Expats Pay Tax in Singapore?

If you are an expat working in Singapore, do you have to pay income tax? The general answer is, yes, you are subject to income tax in Singapore if you are deemed a resident for tax purposes.

If you are considered a Singapore tax resident as an expat living in Singapore, you will be taxed on your income earned in Singapore, regardless of whether it is derived from a trade, business, employment, or another source. At the same time, you are also entitled to many tax reliefs and rebates.

Non-residents are only taxed on their income derived from Singaporean sources. They are not entitled to the same tax reliefs and rebates as residents.

You will need to pay taxes in Singapore if you qualify as a resident for taxation purposes.

Also, note that employers in Singapore generally do not withhold taxes from employees' salaries like they do in many other countries. This means that you may have a bigger tax bill at the end of the financial year waiting for you.

However, the Inland Revenue Authority of Singapore (IRAS) fortunately provides a guide explaining tax information for foreigners that outlines the criteria of tax residency along with the appropriate tax rates.

But let's first demystify if you are a Singapore tax resident or not since whether you pay tax or not, and if you do, how much you will have to pay, all hinges on your tax residency status in Singapore.

How can Singapore Expats Determine their Tax Residency Status?

The Inland Revenue Authority of Singapore (IRAS) states that a tax resident¹ is either:

A Singaporean citizen or Singapore Permanent Resident (SPR) who lives in Singapore except for temporary absences, or
A foreigner who has lived or worked in Singapore for at least 183 days in the previous calendar year, or
A foreigner who has lived or worked in Singapore continuously for 3 consecutive years*, or
A foreigner who has lived or worked in Singapore for a continuous 2 year period** on an ongoing basis and total period of stay is at least 183 days spread over those 2 years, or
A foreigner who has been issued a work pass that is valid for at least 1 year unless the total stay in Singapore is less than 183 days

* This rule is part of the IRAS 3-year administrative concession rule. If you meet this residency test, you will be deemed a tax resident for all 3 years even if your total stay in the first and third year was less than 183 days.
** This rule applies to all foreign workers in Singapore except for directors of a company, public entertainers and professionals (foreign experts, foreign speakers, queen's counsels, consultants, trainers, coaches, etc.).

People who do not satisfy these conditions are referred to as "non-residents" for taxation purposes.

Pay attention to tax residency rules to determine your status. If in doubt, consult a tax professional.

As you can see, the 183 day stay is a very important factor in determining your tax residency status.

The other number that is also super important is 60 days. Below are the rules for less than 183 days stay in Singapore:

If you stay in Singapore for less than 183 days, but more than 60 days, you are considered a non-resident for tax purposes and will pay taxes as per the rules that apply to non-residents.
If you stay in Singapore for less than 60 days, you are fully exempt from income taxes for the short-term income you may have earned in Singapore. However, this does rule not apply if you are a director of a company, public entertainer or a professional; professional category includes foreign experts, foreign speakers, queen's counsels, consultants, trainers, coaches, etc.

If you travel frequently as a Singapore expat, you may need to count the actual number of days spent in Singapore to determine your tax residency for a particular year. It is, therefore, important to ensure that you track your overseas journeys so you can calculate the duration of your stay in Singapore easily.

If you travel frequently, make sure to keep a log of your travel dates as these may be needed to calculate your tax residency status.

If there is any ambiguity that may happen due to dates and absences, the Inland Revenue Authority of Singapore (IRAS) will also consider the following factors to determine if you are a resident for tax purposes:

The duration of your stay in Singapore
The nature and purpose of your stay
Your economic, family, and social ties in Singapore
Your residential ties in Singapore

What Types of Income do Singapore Residents and Non-Residents have to Pay Taxes on?

If you are a tax resident in Singapore, you will be taxed on your income in Singapore including but not limited to:

Employment income (including allowances, benefits-in-kind)
Business and self-employment income
Investment income (including dividends, interests, royalties, and capital gains)

If you have foreign income that you bring into Singapore, it is tax exempt. The only exception to this rule is foreign income derived through partnerships in Singapore, which will be considered taxable in Singapore.

An image of a typewriter producing a paper with the words Tax Return written over it

Note that even though your foreign income may be exempt in Singapore, you may still have to pay taxes on it in the country where that income is sourced from. Make sure to check the tax laws of that country and/or consult with a local tax professional based out of there.

If you are a tax non-resident in Singapore, you will be taxed on your income in Singapore including but not limited to:

Employment income
Business or self-employment income that is derived from or accrued in Singapore
Investment income that is derived from or accrued in Singapore

Note that all employment benefits such as salaries and bonuses are taxable, including even housing rent allowances and stock options. However, income from sources outside of Singapore, dividends from investing in Singapore companies, and bank interests aren't subject to taxation in Singapore.

Generally, both tax residents as well as non-residents have to pay taxes for all income earned in Singapore.

If you have any doubts on which income is taxable or not, you can get more tax related information on the Inland Revenue Authority of Singapore (IRAS) website, or consult your tax professional for advice.

What Types of Tax Deductions can Singapore Residents and Non-Residents claim?

Singapore tax residents are entitled to various types of tax deductions² on expenses, donations and personal reliefs.

Tax residents may claim deductions for:

Numerous personal reliefs that include Earned Income Relief, NSman Relief for self and spouse, Handicapped Relief for some relatives, Foreign Domestic Worker Levy Relief, and many more
Personal tax rebates
Numerous tax savings for married couples and families
Parenthood Tax Rebate (PTR)
Rental expenses
Donations
Self-employment, partnership, trade and business expenses
Eligible employee expenses

As for Singapore tax non-residents, they can only claim tax deductions on expenses and donations, but not on personal reliefs.

Singapore tax residents can claim deductions for various expenses, donations and personal reliefs; non-residents are not allowed deductions on personal reliefs.

What is Singapore Tax Rate for Foreigners?

If you qualify as a resident for Singapore tax purposes, you will have to pay tax from 0% to 22% on final taxable income after accounting for tax deductions for allowable expenses, donations and personal reliefs. The 0-22% tax rate is tiered and depends on your final taxable income.

For tax assessment years from 2017 through 2023, the tax slabs³ for tax-residents are as follows.

Chargeable Income	Income Tax Rate (%)	Gross Tax Payable (SGD)
First $20,000 Next $10,000	0 2	0 200
First $30,000 Next $10,000	- 3.50	200 350
First $40,000 Next $40,000	- 7	550 2,800
First $80,000 Next $40,000	- 11.5	3,350 4,600
First $120,000 Next $40,000	- 15	7,950 6,000
First $160,000 Next $40,000	- 18	13,950 7,200
First $200,000 Next $40,000	- 19	21,150 7,600
First $240,000 Next $40,000	- 19.5	28,750 7,800
First $280,000 Next $40,000	- 20	36,550 8,000
First $320,000 In excess of $320,000	- 22	44,550

Non-residents, on the other hand, are only taxed at a flat rate of 15%, regardless of the type of income.

The only exception to this is the case of directors of a company, public entertainers and professionals (foreign experts, foreign speakers, queen's counsels, consultants, trainers, coaches, etc.) who, even if they are deemed non-residents for taxation purposes, have to still pay 22% tax.

Singapore tax rate is tiered and depends on the final taxable income amount.

Do Expats in Singapore have to Pay Tax on Capital Gains?

In Singapore, the IRAS considers property, shares and financial instruments as capital. If you sell any of these assets, and make a profit on it, such profit would qualify as capital gain. In other words, the capital gain is the amount derived by subtracting the lower original purchase price from the higher selling price.

Singapore does not charge a capital gains tax⁴.

If you are wondering we wrote that wrong, we do not blame you. Numerous countries worldwide charge taxes on capital gains, but Singapore does not.

You do not have to pay taxes in Singapore on capital gains in realized from the sale of property, shares and other financial instruments.

An image of a sample model house and a lens placed over a building floor plan map

To clarify this further, any of the following types of gains and profits are exempt from Singapore taxes:

Gains from the sale of a property (considered as capital gain).
Profit from the sale of shares or other financial instruments (considered as personal investments).
Profits realized from selling cryptocurrencies (considered as personal investments).
Payouts from insurance policies (considered as capital receipts).

The only exception to the above is if your clear intention was to make money off the sale of properties as a trader does. In other words, if you're a trader or dealer whose business profit comes from simply conducting trade and buying and selling properties, then your assessable gains will be considered taxable income by the IRAS.

Below are some of the criteria that the IRAS takes into account in determining if your property sales capital gains are taxable or not:

Holding period for the sold assets
Transaction frequency (buying and selling of properties)
Reasons to buy or sell a property
Financial resources or means to hold the property for long period of time

The Singapore IRAS is very co-operative in helping you determine if your asset sale qualifies as taxable or not. You can get in touch with IRAS to ask.

In case the gains from your property sale are deemed taxable, you should report them under the 'Other Income' section on your Income Tax Return.

Conclusion

The Singapore tax system is a shining example of how tax incentives can be used to not only promote free trade and commerce but also increase government revenue. This symbiotic relationship between the state and its residents has allowed for strong economic growth in recent years.

Singapore's simplified tax policies have resulted in a high compliance rate from residents and companies. This arrangement has benefited the country by providing the resources to develop world-class infrastructure and improve its residents' quality of life. It also entices global businesses to relocate to Singapore.

The information presented in this article is for educational and informational purposes only and is not meant to be tax advice. Please consult with a tax consultant for professional advice on Singapore tax laws.

Do You Need To Find the Best Remit Exchange Rate for Sending Money Internationally?

RemitFinder is an online service that helps you track remit exchange rates. By checking and comparing the latest remit exchange rates, you can get the best exchange rate for your money transfers. RemitFinder, thus, helps you to get the best return for your hard-earned money.

Find the cheapest rate to transfer your hard-earned money - visit our site or download the app on Google Play or Apple App Store now.