Paying 2017-2018 income tax in Singapore? Read this.

TransferWise content team
11.01.18
10 minute read

As the regional headquarters to many multinational corporations and a logistics hub for Southeast Asia, Singapore offers many employment opportunities for foreigners and expatriates. If you’re working in Singapore though, you’ll need to pay income tax to the state regardless of your nationality.

In this article, you’ll learn how income tax is reported and paid to the Inland Revenue Authority of Singapore (IRAS), and the factors that affect your liability.

What income is taxable in Singapore?

All income earned in or derived from Singapore is taxable, while income earned from overseas sources after 1 January 2004 is generally exempt from tax. A comprehensive list of taxable income is listed below:

Type of income Taxable?
Salary, bonus, director's fee, commission and allowances Yes
Gains from the exercise of stock options Yes
Overseas income received in Singapore No, although some types of overseas income may attract tax. More info.
Government pension No
Approved private schemes Yes, for contributions to the fund after 31st December 1992.
Retrenchment and retirement benefits No, exemption from tax only if the payment is to compensate for loss of income. More info.
Income Received as a Self-Employed Person or Sole-Proprietor Yes
Income received through a partnership Yes
Income received in the form of virtual currencies Yes
Dividends No, unless dividend is paid by a cooperative, or is a Real Estate Investment Trust (REIT) or foreign-sourced dividend derived by an individual through a partnership in Singapore. More info.
Gains from sale of property, shares & financial instruments No, unless individual is deemed to be a property trader.
Rent from property Yes
Annuity (Recurring annual payments) No, unless annuity is received from a business, trade, profession or partnership in Singapore, or comes from the Supplementary Retirement Scheme (SRS) account, or is bought by your employer, in place of a pension. More info.
Charge (Alimony, maintenance payments, etc.) No
Estate/Trust income Yes
Royalty earned in Singapore Yes
Winnings (Lottery, jackpot etc) No
Tax on Supplementary Retirement Scheme (SRS) withdrawal Yes

(Source 10 December 2017)

Who has to pay income tax in Singapore?

People who need to pay income tax in Singapore can be broadly categorised into 2 categories, i.e. tax residents and non-residents. Tax residents enjoy tax reliefs and progressive rates, which do not apply to a non-resident.

Resident income tax

You’ll be assessed as a tax resident if you hold a work pass, or work and stay in Singapore:

  • For at least 183 days in a calendar year
  • For at least 183 consecutive days over 2 years (excludes company directors, public entertainers and professionals)
  • For a continuous period over 3 years. The first and third year need not meet the minimum 183-day quota.

(Source 10 December 2017)

Non-resident income tax

If you’ve stayed or worked less than 183 days in Singapore, you’ll be assessed as a non-resident. However, if you’ve worked for less than 60 days in the year, you’ll be exempt from paying income tax. This applies only to employees who are not company directors, public entertainers or professionals.

(Source 10 December 2017)

In what instances do Singapore residents working abroad need to pay income tax?

Singapore residents generally do not need to pay income tax on income earned overseas and brought into Singapore. There are, however, certain conditions where foreign-sourced income is taxable:

  • You receive the income through a partnership in Singapore.
  • Your overseas employment is part of your Singapore-based job, e.g. a regional sales manager.
  • You are working overseas as an employee of the Singapore Government.
  • You run a business or trade based in Singapore, and your overseas income is related to the work done in Singapore.
  • You received service income (e.g. from professional or technical consultancy services) from overseas that is not eligible for tax exemption.

(Source 10 December 2017)

How much income tax do Singapore self-employed persons need to pay?

You’re a self-employed worker in Singapore when you work for others under a contract for service, you have your own business and you realise your own business profit or loss. You can either be a sole-proprietor or a partner in a partnership. If you work under a contract of service, this means that you are an employee, and you work under your employer.

As a self-employed taxpayer, you may deduct allowable business expenses and report the final profit and loss amount to IRAS. If you are a sole-proprietor, you’ll pay tax based on personal income tax rates. As a partner in a business, you’ll need to pay the tax based in your allocated share.

(Source 1, Source 2 10 December 2017)

What are the income tax rates in Singapore in 2017-2018?

How much income tax you pay depends on your tax residency status. Generally, tax residents pay a progressive tax that increases with income, while non-residents do not enjoy preferential rates.

The table below shows the progressive rates that apply to tax residents.

Income component range (SGD) Singapore income tax rate (%) 2017 Total cumulative tax payable (SGD)
0 - 20,000 0 0
20,000 - 30,000 2 (Income - 20,000) x 2%
30,000 - 40,000 3.5 (Income - 30,000) x 3.5% + 200
40,000 - 80,000 7 (Income - 40,000) x 7% + 550
80,000 - 120,000 11.5 (Income - 80,000) x 11.5% + 3,350
120,000 - 160,000 15 (Income - 120,000) x 15% + 7,950
160,000 - 200,000 18 (Income - 160,000) x 18% + 13,950
200,000 - 240,000 19 (Income - 200,000) x 19% + 21,150
240,000 - 280,000 19.5 (Income - 240,000) x 19.5% + 28,750
280,000 - 320,000 20 (Income - 280,000) x 20% + 36,550
>320,000 22 (Income - 320,000) x 22% + 44,550

Non-residents are taxed based on their employment status, and the type of work done. The table below summarises the various rates.

Type of income Singapore income tax rate (%) 2017
Employment 15% or using progressive rates, whichever is higher
Director's remuneration 22%
Professional income (consultant, trainer, coach, etc) 15% of gross income or 22% of net income. Details
Public entertainer (artiste, musician, sportsman, etc.) 10% concessionary rate
Property rental income 22%. Details
SRS withdrawal by a non-citizen SRS member 22%. Details
Interest, royalty etc. Reduced final withholding tax rate is Interest: 15% Royalty: 10% OR Reduced final withholding tax rate is not applicable: 22%

(Source 10 December 2017)

What are the tax exemptions in Singapore?

To reduce your payable tax, you may declare allowable expenses, donations, reliefs and rebates. This option is available to tax residents only, as non-residents are not entitled to tax relief.

Deductions for Employees

You may request for a deduction on personal expenses that were incurred while carrying out your official duties as an employee. These expenses shouldn’t be previously reimbursed by the employer, and aren’t capital in nature.

You’ll also need to track your expenses along with invoices and receipts, and keep them for the next 5 years in case of an audit.

(Source 11 December 2017)

Deductions for Sole-Proprietors, Self-Employed Individuals or Partners in a Partnership

Business owners and self-employed taxpayers can deduct allowable business expenses to reduce the tax liability.

The government also grants tax deductions to businesses that invest in R&R, land intensification, productivity and other initiatives.

(Source 1, Source 2 10 December 2017)

Deductions on Rental Expenses

Landlords can make a deduction on expenses incurred during the period of lease, which is used to produce the rental income.

(Source 11 December 2017)

Deductions on Donations

You may claim 2.5 to 3 times on the total donation value made to an approved Institution of Public Character (IPC), the Singapore Government, or an approved educational or cultural institution. However, donations made with the intention for marketing or advertising purposes, and donations to a overseas funds, are both not tax-deductible.

(Source 11 December 2017)

Deductions under Angel Investors Tax Deduction Scheme (AITD)

Angel investors may claim for tax deduction if they have invested in Singapore-based startup companies. To qualify, you will need to:

  • Invest at least SGD 100,000 in a qualifying company, within 12 months of the first investment in that same company.
  • Hold the investment for at least 2 years from the latest qualifying investment.

(Source 11 December 2017)

Reliefs and Rebates

Singapore tax residents enjoy many reliefs and rebates to promote social and economic objectives. This table below summarises the benefits, and the prerequisites required.

Tax relief Prerequisite Remarks
Course Fees Relief Everyone Tax deduction on course fees to upgrade skills and enhance employability. Details.
CPF Relief Singapore citizen or permanent resident Tax deduction on cash contributions to the taxpayer’s Central Provident Fund (CPF) account. Details.
Earned Income Relief Everyone Tax deduction for taxpayers who need to pay taxes on income. Details.
Handicapped Brother/ Sister Relief Everyone Tax deduction for taxpayers who live in the same household as a handicapped sibling and are supporting them financially. Details.
Life Insurance Relief Everyone Tax deduction on annual premiums for a life insurance policy. The insurance company must have an office in Singapore. Details .
NSman (Self) Relief Singapore citizen Tax deduction for citizens who have either served the mandatory National Service stint in the armed forces, police or civil defence. The wife and parents of the NSman will also be given tax deductions separately. Details.
Parent/ Handicapped Parent Relief Everyone Tax deduction for taxpayers who are currently supporting or taking care of their parents. Details.
Supplementary Retirement Scheme (SRS) Relief Everyone Tax deduction for taxpayers who make voluntary contributions to their Supplementary Retirement Scheme (SRS). Details.
Qualifying/ Handicapped Child Relief Married/ Divorced/ Widowed Taxpayers Tax deduction for parents looking after an unmarried child below 16 years old or is currently studying full-time. Details.
Spouse/ Handicapped Spouse Relief Married/ Divorced/ Widowed Taxpayers Tax deduction for taxpayers currently supporting his or her spouse, who is earning less than $4,000 annually or is handicapped. Details.
Foreign Maid Levy (FML) Relief Married/ Divorced/ Widowed Female Taxpayers Tax deduction for married women who employed a foreign domestic worker in the last assessment year. Details.
Grandparent Caregiver Relief Married/ Divorced/ Widowed Female Taxpayers Tax deduction for working mothers who engage the help of parents or grandparents to look after her children. Details.
Working Mother's Child Relief Married/ Divorced/ Widowed Female Taxpayers Tax deduction for working mothers who have a child with Singapore citizenship and qualify for child relief deductions. Details.

What are the tax penalties in Singapore?

The Income Tax Act defines the penalties to be meted out for tax evaders and incorrect reporting.

Type of offence Penalty
Failure to report income Up to $1,000 fine or 6 months imprisonment.Further penalty of $50 every day if offence is continued after conviction.
Failure to report income for 2 years or more Pay double of the tax amount as assessed by the Comptroller.Up to $1,000 fine or 6 months imprisonment.
Incorrect reporting Pay the equivalent amount of the assessed tax.
Incorrect reporting without reasonable excuse or wilful negligence Pay double the equivalent amount of the assessed tax.Up to $3,000 fine or 36 months imprisonment or both.

(Source 11 December 2017)

What sort of double taxation agreements are there with Singapore?

Avoidance of double taxation agreements (DTA) between Singapore and treaty partners define the tax rights on income from cross-border economic activities.

Certain types of income may also qualify for a reduction or exemption of tax under a DTA.

The following lists the countries which have signed a DTA with Singapore.

Albania Australia
Austria Bahrain
Bangladesh Barbados
Belarus Belgium
Brunei Bulgaria
Canada China
Cyprus Czech Republic
Denmark Ecuador
Egypt Estonia
Ethopia Fiji
Finland France
Georgia Germany
Guernsey Hungary
India Indonesia
Ireland Isle of Man
Israel Italy
Japan Jersey
Kazakhstan Korea, Republic of
Kuwait Laos
Latvia Libya
Liechtenstein Lithuania
Luxembourg Malaysia
Malta Mauritius
Mexico Mongolia
Morocco Myanmar
Nederlands New Zealand
Norway Oman
Pakistan Panama
Papua New Guinea Philippines
Poland Portugal
Qatar Romania
Russian Federation Rwanda
San Marino Saudi Arabia
Seychelles Slovak Republic
Slovenia South Africa
Spain Sri Lanka
Sweden Switzerland
Taiwan Thailand
Turkey Ukraine
United Arab Emirates United Kingdom
Uruguay Uzbekistan
Vietnam

(Source 1 Source 2 12 December 2017)

How do I pay income tax in Singapore?

You can file your taxes using any of the following channels

  • Paying income tax online
  • Mobile phone
  • Paper form

The first 2 electronic channels are done via the myTax Portal, while you need to opt in for paper form submissions to get the documents from IRAS.

(Source 12 December 2017)

Paying income tax online

Visit myTax Portal and login using SingPass, which is a single login account for all government e-services. Alternatively, you can request for an IRAS PIN.

Prepare the following documents before you begin:

  • Form IR8A (if your employer is not participating in the Auto-Inclusion Scheme)
  • Particulars of your dependants (e.g. child, parent) for new relief claims
  • Details of other sources of income, if applicable
  • Business Registration Number / Partnership Tax Reference Number (applicable to self-employed or partners)

Once ready, click on "Individuals" > "File Form B/B1" to start. You’ll be directed to an acknowledgement page after the e-filing is completed.

To make payment, the most convenient channel is auto-payment through GIRO, which works for local bank accounts.

If you’re sending money from your overseas account to pay for tax, IRAS accepts telegraphic transfers. Note that telegraphic transfers are usually converted on poor exchange rates defined by banks or traditional money transfer services, and incur additional charges that need to be absorbed by the sender.

To save on these additional costs, TransferWise uses its smart new technology to use local banking systems to get money to Singapore from overseas. And because all of the money stays local, they can cut out huge international costs and offer you the real mid-market rate, the same you get on Google. Before you pay your taxes from abroad, however, do check with IRAS if they are able to accept payments from a third party (TransferWise). Moreover, to facilitate fund transfers, you can use a TransferWise borderless multi currency account to hold your money and transfer dozens of currencies easily, including the Singapore Dollar. For no monthly fee.

If you can’t use TransferWise to pay directly to IRAS, for instance when you don’t have a bank account in Singapore yet, consider sending the money to a family member or a trusted friend in Singapore, to help make the payment on your behalf. You can then use TransferWise to reduce the cost in transferring the funds to that local bank account.

Tax reporting and paying your taxes is a complicated process, and under-reporting is a criminal offence. Hence, it’s important to know what options are available to you, and how to file it correctly. It’s also a good idea to seek some help from a professional, to make sure that you’re filing your taxes correctly and that you don’t lose out on any tax exemptions that might be applicable to you.

Also, if you’re working abroad and need to pay taxes in Singapore, consider using TransferWise to save you some money on cross-border payments. Every dollar saved can be better spent on paying off your tax liability!

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content is the publication is accurate, complete or up to date.

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