The tax system of Singapore is a favourable one, however, getting it to work for foreign businesses and employees requires some local knowledge and expertise. One of the reasons for Singapore’s economic success is attributed to foreign talent and international business. Unquestionably, this policy works, almost half the Asian headquarters of multinational corporations are based in Singapore.
Singapore is the gateway to entering a wider Asian Pacific market for foreign businesses, not only that, Changi Airport is consistently regarded as Asia’s most connected. The welcoming attitude of Singapore is expressed in its tax policies, which are among the most business-friendly on the globe. While the basic corporate tax rate is 17%, many businesses end up paying less than that because of exemptions.
Concurrently, a progressive tax is placed on an individual’s income accrued in or derived from Singapore at a rate ranging between 0% to 22% (24% as of 2023). The tax system of Singapore is attractive and straightforward for companies and individuals. However, it can get somewhat complex, especially for foreign-owned entities and the employees under them, who of which are new to the tax system of Singapore.
Unacquainted newcomers to the tax system of Singapore are encouraged to enlist local expertise to make certain that their tax returns are filed correctly and punctually, taking advantage of any benefits, administrative concessions, and exemptions that come with the compliance.
Tax filing for corporations in Singapore
The government of Singapore does not hide the fact that it desires to attract multinational businesses into the country. This can be seen in the promotion of the island state as a stable, lawful, and influential gateway into the Asian continent.
Because of this reason, corporate tax laws are perpetually accessed. Resulting in tax regimes that are fair, and transparent and affect both large and small businesses relatively in the same way. A 17% basic corporate tax rate is applied across businesses and can usually be decreased to even 0%, on the condition that businesses utilise the available potential benefits, tax incentives and exemptions.
Unsurprisingly, the tax system favours its own resident businesses over local branches of international organisations. Nonetheless, the regime is still attractive to any firms looking to build a solid growth foundation in Asia.
A specific benefit that businesses and investors can enjoy in Singapore is the proactive approach to tax treaties. The Avoidance of Double Taxation Agreements (DTAs), signed by the city state, are limited DTAs that only apply to certain types of income and Exchange of Information Arrangements with about 100 jurisdictions. These include regional neighbouring countries of Singapore, such as Malaysia, Indonesia, the Philippines, and Vietnam.
Income tax for individuals in Singapore
Singaporean residences are subject to a progressive tax rate ranging between 0% and 22%, depending on the accrued or derived income from Singapore. However, the higher rates are facing an increase. A recent budget raised the tax on the portion of chargeable income between SGD 500,000 and SGD 1m to 23%, and any portion exceeding SGD 1m can go up to 24%. These changes are to take effect from 2023 onwards.
An individual’s income in Singapore is only taxed when it is above SGD 20,000. The tax system of Singapore is a bit more complex when it comes to non-residents, who are subject to a base rate of a minimum of 15%, or the relevant progressive tax rate that is higher. But only income accrued in or derived from will be taxed.
An individual must live or work in the state for a minimum of 183 days in any single year or continuously for three consecutive years to be deemed a resident for the purposes of tax. Individuals who work in Singapore for a continuous period over two calendar years aggregating at least 183 days are also qualified.
An apparent benefit for both residents and non-residents is not having to pay capital gains tax, meaning that tax does not need to be paid when selling property, shares, antiques, or other assets given that these are isolated occurrences and carried out infrequently. This benefit sets the tax system of Singapore apart from other major economies.
Similarly to their corporate counterparts, individual taxes are also continuously accessed for transparency, simplicity, and their effect on the wider economy. A recent development has made the tax system of Singapore slightly less generous for foreign employees, the removal of the Not Ordinarily Resident (NOR) status in 2019. The Government scrapped this tax exemption scheme that had been in operation since 2002.
The NOR was put in place to attract foreign nationals with regional roles as it simplified the process of avoiding double taxation for employees of international companies who spent significant amounts of time traveling and working outside of Singapore.
Yet, even with the removal of the NOR, the tax system of Singapore for individuals still remains one of the most attractive in the Asia Pacific region.
Tax filing for corporations in Singapore
The government of Singapore does not hide the fact that it desires to attract multinational businesses into the country. This can be seen in the promotion of the island state as a stable, lawful, and influential gateway into the Asian continent.
Because of this reason, corporate tax laws are perpetually accessed. Resulting in tax regimes that are fair, and transparent and affect both large and small businesses relatively in the same way. A 17% basic corporate tax rate is applied across businesses and can usually be decreased to even 0%, on the condition that businesses utilise the available potential benefits, tax incentives and exemptions.
Unsurprisingly, the tax system favours its own resident businesses over local branches of international organisations. Nonetheless, the regime is still attractive to any firms looking to build a solid growth foundation in Asia.
A specific benefit that businesses and investors can enjoy in Singapore is the proactive approach to tax treaties. The Avoidance of Double Taxation Agreements (DTAs), signed by the city state, are limited DTAs that only apply to certain types of income and Exchange of Information Arrangements with about 100 jurisdictions. These include regional neighbouring countries of Singapore, such as Malaysia, Indonesia, the Philippines, and Vietnam.
Income tax for individuals in Singapore
Singaporean residences are subject to a progressive tax rate ranging between 0% and 22%, depending on the accrued or derived income from Singapore. However, the higher rates are facing an increase. A recent budget raised the tax on the portion of chargeable income between SGD 500,000 and SGD 1m to 23%, and any portion exceeding SGD 1m can go up to 24%. These changes are to take effect from 2023 onwards.
An individual’s income in Singapore is only taxed when it is above SGD 20,000. The tax system of Singapore is a bit more complex when it comes to non-residents, who are subject to a base rate of a minimum of 15%, or the relevant progressive tax rate that is higher. But only income accrued in or derived from will be taxed.
An individual must live or work in the state for a minimum of 183 days in any single year or continuously for three consecutive years to be deemed a resident for the purposes of tax. Individuals who work in Singapore for a continuous period over two calendar years aggregating at least 183 days are also qualified.
An apparent benefit for both residents and non-residents is not having to pay capital gains tax, meaning that tax does not need to be paid when selling property, shares, antiques, or other assets given that these are isolated occurrences and carried out infrequently. This benefit sets the tax system of Singapore apart from other major economies.
Similarly to their corporate counterparts, individual taxes are also continuously accessed for transparency, simplicity, and their effect on the wider economy. A recent development has made the tax system of Singapore slightly less generous for foreign employees, the removal of the Not Ordinarily Resident (NOR) status in 2019. The Government scrapped this tax exemption scheme that had been in operation since 2002.
The NOR was put in place to attract foreign nationals with regional roles as it simplified the process of avoiding double taxation for employees of international companies who spent significant amounts of time traveling and working outside of Singapore.
Yet, even with the removal of the NOR, the tax system of Singapore for individuals still remains one of the most attractive in the Asia Pacific region.
Singapore tax return filing: How we can help
- The removal of NOR has highlighted the importance of local knowledge in navigating the complexities of the tax system in Singapore. Agile 8 is fully equipped with the experience and expertise needed to help international corporations and their employees in Singapore take advantage of the benefits, administrative concessions, and exemptions available.
- Compared to the rest of the world, Singapore is much more progressed when it comes to the digitalization of its tax regime. But, gaining access to the system and
- acquiring approval from it can be a complex and time-consuming process, especially for foreign nationals and businesses. Agile 8 can do all that work for you.
- The tax filing deadline in Singapore for individuals is in mid-April. For corporate tax, it is in June. Agile 8 can aid in making the process as smooth, convenient, and effective as possible.
- Businesses that are under the care of Agile 8 for their bookkeeping and accounting, corporate secretarial, or other services find it convenient to have a trustworthy supplier file corporate and individual tax returns as well.
The tax system of Singapore is a favourable one, however, getting it to work for foreign businesses and employees requires some local knowledge and expertise. One of the reasons for Singapore’s economic success is attributed to foreign talent and international business. Unquestionably, this policy works, almost half the Asian headquarters of multinational corporations are based in Singapore.
Singapore is the gateway to entering a wider Asian Pacific market for foreign businesses, not only that, Changi Airport is consistently regarded as Asia’s most connected. The welcoming attitude of Singapore is expressed in its tax policies, which are among the most business-friendly on the globe. While the basic corporate tax rate is 17%, many businesses end up paying less than that because of exemptions.
Concurrently, a progressive tax is placed on an individual’s income accrued in or derived from Singapore at a rate ranging between 0% to 22% (24% as of 2023). The tax system of Singapore is attractive and straightforward for companies and individuals. However, it can get somewhat complex, especially for foreign-owned entities and the employees under them, who of which are new to the tax system of Singapore.
Unacquainted newcomers to the tax system of Singapore are encouraged to enlist local expertise to make certain that their tax returns are filed correctly and punctually, taking advantage of any benefits, administrative concessions, and exemptions that come with the compliance.