A Guide to Taxation in Singapore

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As Singapore adopts a territorial basis for taxation, companies are taxed only on their Singapore-sourced income. Foreign-sourced income, such as branch profits, dividends and service income, is taxable if remitted or deemed to be remitted to Singapore, provided that it is taxed at a rate of at least 15% in the source country. case is exempt. There is also no capital gains tax in Singapore.

Corporate tax

Singapore levies CIT at a flat rate of 17%, the lowest among ASEAN member states. The country implements a single-tier corporate tax system. That is, the corporation pays her CIT only on taxable income (profit) and all dividends are exempt from further taxation.

Low CIT rates have attracted a dynamic investment community to Singapore consisting of over 7,000 multinationals, more than half of which operate their Asia Pacific operations from Singapore.

Foreign investors should seek the help of a registered local tax advisor to better understand how to remain compliant with relevant regulations.

Who is obliged to pay?

Companies with income derived from or remitted to the country, whether domestic or foreign, are required to pay corporate tax on their taxable income at the rate of 17%.

A company’s incorporation tax residence is determined by where the business is managed and controlled. The location of a company’s board of directors, where strategic decisions are made, is a key factor in determining where control and management take place. A company is considered a tax-exempt resident if its board of directors or other principal management managing its business is based outside of Singapore.

Furthermore, this is also the case where the company holds its board meetings outside of the country, even though it conducts its day-to-day operations in Singapore.

Taxable income includes:

  • Profits from trade or business (single-tier system means that Singapore-based companies pay tax only on profits and not on revenues);
  • royalties and premiums;
  • rental property income; and
  • Income from investments such as interest.

tax resident

Corporate and individual tax liability in Singapore depends on the taxpayer’s residency status.

Resident and non-resident companies

In Singapore, companies are either resident or non-resident. The Inland Revenue Authority of Singapore (IRAS) determines residence depending on where the company is managed and controlled, i.e. where strategic decisions are made. This means that the company’s place of residence is not necessarily the place of incorporation.

For example, a company may be incorporated in Singapore, but de facto determined in another jurisdiction such as Hong Kong or London, would be considered non-resident. One of the factors that determines residence is where the company holds its board meetings. not necessarily the only factor.

Resident vs Non-Resident

Both Singapore Citizens and Singapore Permanent Residents are considered taxpayers. A foreigner is considered a taxpayer if:

  • (a) have resided or worked in Singapore for 183 days or more in the calendar year preceding the assessment (YA); or (b) for 3 consecutive years.Also
  • Have worked in Singapore for a continuous period of two calendar years with a total length of stay exceeding 183 days, including physical presence in Singapore before and after starting work.

IRAS classifies non-residents into three categories: foreign professionals, entertainers and directors. A resident in all three categories will have different tax obligations depending on whether her stay in Singapore is less than 183 days in a calendar year.

Professionals who stay in Singapore for less than 183 days in a calendar year are non-residents. Examples of foreign experts include foreign experts or consultants invited to Singapore to share their knowledge and expertise with organisations, academics attending seminars and workshops, or individuals working through foreign companies. will be

Foreign entertainers such as musicians, dancers, actors, athletes, etc. who visit Singapore to perform for less than 183 days. Both individuals and company employees are classified as entertainers. IRAS does not include individuals who assist the performers of this category of entertainers, such as audio crews, choreographers, coaches, personal trainers, etc.

Finally, a director or company director is a non-resident if he/she spends less than 183 in a calendar year in Singapore. Directors may also hold other roles within the company, such as Chief Executive Officer and Managing Director, but are considered directors only for the income they derive from that role.

Benefits of being a taxpayer

Qualifying as a tax resident means that the company is eligible for a number of tax incentives offered by the country, which can reduce the total effective corporate tax rate. increase.

These incentives include a 75% tax exemption on the first S$100,00 (US$73,300) taxable income for new start-ups and an additional 50% tax exemption on the next S$100,00 (US$73,300) taxable income. including tax exemption for (first available in his 3 years of operation). All other companies receive a 75% exemption on the first S$10,000 (US$7,334) of taxable income and a further 50% exemption on the next S$190,000 (US$139,000).

Taxpayers can benefit from more than 90 double tax avoidance (DTA) agreements in the country, allowing businesses to eliminate instances of double taxation between treaty signatories.

In addition, taxpayers will benefit from access to the wider Asian market through the country’s comprehensive free trade agreements (FTAs).

personal income tax

A foreigner’s tax liability in Singapore depends on the taxpayer’s residency status.

taxable income

Income tax rate (%)

First S$20,000 (US$14,888)

0

Next S$10,000 (US$7,411)

2

First S$30,000 (US$22,233)

Next S$10,000 (US$7,411)

3.5

First S$40,000 (US$29,641)

Next S$40,000 (US$29,641)

7

First S$80,000 (US$59,282)

Next S$40,000 (US$29,641)

11.5

First S$120,000 (US$88,923)

Next S$40,000 (US$29,641)

15

First S$160,000 (US$118,554)

Next S$40,000 (US$29,641)

18

First S$200,000 (US$148,183)

Next S$40,000 (US$29,641)

19

First S$240,000 (US$177,820)

Next S$40,000 (US$29,641)

19.5

First S$280,000 (US$207,457)

Next S$40,000 (US$29,641)

20

First S$320,000 (US$237,107)

Over S$320,000 (US$237,107)

22.5

Tax exempt residents are taxed at a flat rate of 15%.

goods and services tax

Goods and Services Tax (GST), also known as Value Added Tax (VAT), is a consumption tax levied in Singapore on goods and services, whether obtained from domestic or overseas suppliers.

As GST is a self-assessment tax, businesses based in Singapore should assess their need to register for GST. As of 1 January 2023, the GST rate will be seven to eight percent.

GST charged to customers is known as ‘output tax’ and GST incurred on business purchases and expenses including the importation of goods is known as ‘input tax’. The difference between the production tax and the input tax is the net GST paid to the government.

withholding tax

Withholding tax applies only to non-resident companies or individuals originating in Singapore. The types of income subject to withholding tax are:

capital gains tax

There is no capital gains tax in Singapore. In general, gains from the sale of property/investments in Singapore are not taxed as they are capital gains. However, if you are trading stocks, your profits may be taxable.


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ASEAN Briefing Producer Shiradeyama Law OfficeThe company supports foreign investors across Asia and has offices across ASEAN. Singapore, Hanoi, Ho Chi Minh CityWhen Da Nang Vietnam, MunichWhen Essen in German, bostonWhen salt lake city in the United States, milan, ConeglianoWhen Udine In addition to the Italian JakartaWhen Batam in Indonesia.We also have partner companies Malaysia, Bangladesh, PhilippinesWhen sea ​​bream not only, China When India. Contact [email protected] or visit our website www.dezshira.com.

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