Singapore Personal Tax Frequently Asked Questions
If you’re living in Singapore, or considering a move to Singapore, you are bound to have questions on how to make your money go as far as possible. At Hawksford we’ll give you the answers and support your business growth.
Am I considered a non-resident if I travel for work outside Singapore for more than half the year?
You are likely to be taxed as a resident in Singapore since your travel is incidental to your Singapore employment. That is, as part of your work here, you need to travel overseas.
How is the salary and director's fee to a non-resident director of a Singapore tax resident company taxed?
In general, directors' remuneration derived from a company resident in Singapore is taxable in Singapore regardless of your physical presence in Singapore, due to the fact that the income was derived in Singapore. Taxable income refers to both cash and non-cash payments and include salary, bonus, director's fees, accommodation provided, etc.
Your employer must:
- Withhold tax at 22% (20% for income due and payable prior to 1 Jan) of all payments made to you in the capacity as a non-resident director of the company
- File Form IR37 and pay the withholding tax by the 15th of the month following the date of payment to you
As your employer has withheld tax at source and filed IR37, you need not file a separate tax return for the director's remuneration. However, if you have been issued a tax return, please declare all sources of income derived from Singapore including director's remuneration and enter the tax withheld under the field "Tax deducted at source".
A non-resident director may also take on an executive role (e.g Chief Executive Officer, Chairman, Managing Director) and is involved in the daily running of the business operations. The remuneration derived by a non-resident director in his capacity as an executive director is not subject to withholding tax.
Do I need to pay taxes on my dividend income from my Singapore company?
The following types of dividends are exempt from taxation in Singapore:
- Dividends from Singapore companies to its shareholders.
- Foreign dividends received in Singapore. This excludes foreign source income received through partnerships in Singapore.
- Income distributions from unit trusts and real estate investment trusts (REIT), that are authorised under Section 286 of the Securities and Futures Act (excludes distributions out of franked dividends).
I live abroad and am paid by a Singapore company as a consultant. Do I have to pay Singapore taxes?
If an employee is contracted to be stationed outside Singapore to render his services, his salary is not taxable in Singapore, as the income is sourced outside Singapore. This is irrespective of the fact that his contract of employment may be concluded in Singapore or his salary is paid into a Singapore bank account. For services or consulting done outside Singapore, there is no withholding tax. Withholding tax is applicable only for income from services provided or work done in Singapore.
I live in Singapore and consult for a foreign company. Is my income taxable?
Yes. You will be taxed on your income (at resident rates) earned for the period you rendered consulting services in Singapore even if your employer is not a resident in Singapore or your income is not paid in Singapore.
Can a Singapore employee who spend less than 183 days here, be taxed as a resident?
That depends on the circumstances. If, for instance, you are employed by a Singapore company as a sales consultant and as a result of frequent business trips you have spent less than 183 days here, you will still be taxed as a resident. However, if you are posted on an offshore project for several months, as a result of which you have spent less than 183 days in Singapore, you will be taxed as a non-resident.
What is the personal tax rate in Singapore?
Resident individuals are taxed on a progressive tax rate basis starting at 0% and ending at 22% above S$320,000. Non-resident individuals are taxed at 15% or the progressive tax rates on the employment income, whichever results in a higher tax amount.
Taxes on Director's fees, Consultation fees, and All Other Income will be at 22% with effect from Year of Assessment (YA) 2017 (except certain reduced final withholding tax rates).
A detailed chart of progressive tax rates is available here.
What is the due date for personal income tax filing in Singapore?
The personal income tax filing deadline in Singapore is 15 April. Singapore follows a calendar year basis for personal taxes.
Who is liable to file a personal tax return in Singapore?
Every individual, both tax residents and non-tax residents are required to file a separate tax return every calendar year on all incomes including gains or profits from a trade or profession and earnings from employment.
If a non-tax resident is employed for less than 60 days. short term employment income is exempt from tax. The 60 day rule does not apply if you are a director of a company, a public entertainer or exercising a profession in Singapore.
Who is considered a Singapore tax resident?
You are considered a tax resident of Singapore if you have stayed in Singapore for more than 183 days in the tax year and have earned an income in Singapore.
Are company directors taxed differently in Singapore?
There is no difference in taxation for Singapore resident directors. Their income is subject to the same progressive tax rates as any other local individual. For non-resident directors there is a special rule for income derived from Singapore:
- Director fees, consultant fees and all other incomes are taxed at 22%.
- The employment income of non-resident director is taxed at a flat rate of 15% or the progressive resident tax rates, whichever is a higher tax amount.
Keep in mind that we are not talking about shareholders here. Distribution of dividends to shareholders is tax-free in Singapore regardless of where the shareholders are located.
If my company pays for my accommodations, will there be tax consequences for me?
Yes, this benefit comes under the umbrella of benefits-in-kind which refers to benefits received by employees, from the employer, in non-cash form. However many of these benefits are taxed at a reduced rate.
Does Singapore tax its residents on worldwide income?
Taxation on worldwide income for Singapore residents depends on the source of income. An income is liable to Singapore tax if the source of the income is in Singapore. In other words, your income was accrued in or derived from Singapore, as a result of employment exercised in Singapore, even though your employer is a non resident/overseas company. However, income sourced overseas is tax exempt i.e. if your income was derived from outside Singapore as a result of employment exercised outside Singapore.
There are certain circumstances under which overseas income is taxable:
- It is received in Singapore through partnerships in Singapore.
- Your overseas employment is incidental to your Singapore employment. That is, as part of your work here, you need to travel overseas.
- You are employed outside Singapore on behalf of Government of Singapore.
Are gains incurred on stock investments taxable?
As an employee, you may receive either share options as a result of any office held by you (e.g. a director or an external auditor) or you may own or purchase shares in the company or in its parent company using the share awards and other similar forms of employee share purchase plans. Gains from such benefits are taxable.
Profits from the buying and selling of shares or other financial instruments on your own account are viewed as personal investments and are not subject to tax as they are capital gains. However, to determine whether an individual is trading, factors such as the frequency and volume of transactions, the interval between the purchase and sale, and the manner of financing the purchase of shares, will be taken into consideration.