Income Tax brackets In Singapore

Income Tax brackets In Singapore: Explained

Singapore’s progressive income tax system can seem intricate, but it’s designed to be fair and equitable. Looking to master tax brackets in Singapore? Fret not! We’ve got you covered!

Understanding the various tax brackets is key for residents and expats alike to manage their finances effectively. This guide delves into the nuances of Singapore’s tax brackets, providing clarity and insight to help you navigate your fiscal responsibilities with ease.

Let’s dive in!

Personal Income Tax Rates

Income Tax brackets In Singapore 1

Individual Singapore income tax includes the following:

  • Singapore has a progressive resident tax rate starts at 0% and rises to 22% above S$320,000.
  • There is no inheritance or capital gains tax.
  • Individuals are only taxed on earnings in Singapore (with a few exceptions)
  • The tax rules vary depending on the individual’s tax residency.
  • Individual tax returns are due on the 15th of April of each year. Income tax is calculated on a year-to-year basis.

Individuals in Singapore are subject to a progressive resident tax rate, as shown below. You must file a personal tax return if your annual income exceeds S$20,000

You do not have to pay taxes if your annual income is less than twenty thousand Singapore Dollars (S$20,000).

 If the Singapore tax office has told you that you must file a tax return, you must do so. Further earned income relief is available to reduce the tax payable based on age.

Resident Tax Rates

Chargeable IncomeRate (%)Gross Tax Payable ($)
On the first 20,000On the next 10,000020200
On the first 30,000On the next 10,0003.50200350
On the first 40,000On the next 40,00075502,800
On the first 80,000On the next 40,00011.53,3504,600
On the first 120,000On the next 40,000157,9506,000
On the first 160,000On the next 40,0001813,9507,200
On the first 200,000On the next 40,0001921,1507,600
On the first 240,000On the next 40,00019.528,7507,800
On the first 280,000On the next 40,0002036,5508,000
On the first 320,000In excess of 320,0002244,550

Tax Rates For Non-residents

Type of IncomeNon-resident individual tax rate / withholding tax rate from YA 2017
Remuneration Of Director22%
Incomes from non-resident professionals15% of gross income or 22% of net income
Incomes from non-resident professional activities 10% concessionary rate (No change)
Other income e.g. rental income derived from a Singapore property22%
SRS withdrawal by a non-citizen SRS member22%
Interest, royalty, etc.Reduced final withholding tax rate (subject to conditions) as follows:
Interest: 15%
Royalty: 10%

OR

22% if the reduced final withholding tax rate is not applicable.
Pension22%

Personal Taxation For Singapore Residents

Tax residents pay taxes on their taxable income in accordance with the resident tax rates listed in the table above.

The chargeable income (i.e., income subject to taxation) of tax residents is calculated as follows:

Total Income

Less: Expenses

Statutory Income

Less: Donations

Accessible Income

Less: Personal Reliefs

Chargeable Income

Total Income

  • Income or profits derived from conducting any company, trade, profession, or vocation as a lone proprietor or partner in a partnership
  • Earnings or benefits from any employment
  • Dividends, interest, and capital gains
  • Rentals, royalties, premiums, and other income derived from real estate
  • Exclude qualifying income obtained outside the United States (more specifics supplied later in the guide).

Expenses

  • Qualified job-related expenditures
  • Rental-related expenses that qualify

Donations

  • Contributions to approved charitable organizations.
  • Personal Relief denotes.
  • Personal tax breaks, such as qualified parent tax breaks, course fees, earned income tax breaks, etc.
  • Chargeable income is the adjusted income after deductions from total income.

Personal Tax For Singapore Non-residents

Income Tax brackets In Singapore 2

If you are a foreigner who spent less than 183 days in Singapore during the tax year, you are considered a non-resident. 

You will be taxed as a non-resident in the following ways:

  • If you are here for less than 60 days a year, your employment income is tax-free. This exemption does not apply if you are a company director, a public entertainer, or a Singaporean practicing a profession.
  • Professionals include foreign specialists, speakers, queen’s counsels, consultants, trainers, and coaches.
  • If you spend 61-182 days in Singapore yearly, you will be taxed on any income earned there. Expenses and donations can be deducted from your taxes.
  •  Personal reliefs, however, are not available to you. Employment income is taxed at around 15% or the progressive resident tax rate (see rate table above).
  • Director and remuneration fees, consultancy fees, and all other income are taxed at a rate ranging from 15% to 22%.

Personal Income Tax Returns

All qualified taxpayers must file a tax return once a year. By April 15th, all completed papers must be presented to the Singapore tax department.

You do not have to pay tax if your annual income is less than twenty-two Singapore Dollars (S$22,000) (applicable only to tax residents). 

You may still be needed to file returns if the tax authority has advised you that you must submit your tax form. 

Even if you had no income in past years, you must still indicate zero income on your tax form and submit it by April 15 (paper) or April 18 (e-filing). If your annual income is around S$22,000 or higher, you must file tax returns.

You can file your returns either online or by mail. IRAS will give you the necessary paper tax form; however, the online form will be available from 1 March each year upon request.

  • Form B1 is for individuals who are tax residents.
  • Form B is for self-employed people.
  • Form M is for non-resident individuals.

If you file late or do not file at all, you will suffer fines. IRAS may also take legal action against the individual if he or she fails to file a tax return or pay taxes.

From May to September, you will get your Notice of Assessment or tax bill once you have filed your taxes. 

Your tax bill will reflect the amount of tax you must pay. If you disagree with the amount of your tax, you must contact the Singapore tax authority within 30 days of receiving your tax bill, explaining your reasons for complaint.

You must pay the whole tax amount within 30 days of receiving your Notice of Assessment. This is true whether or not you have informed the tax authorities of your complaint. 

Fines or penalties will be assessed if your tax is unpaid within 30 days.

Rate Of Corporate Taxation

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Singapore’s introductory corporate tax rate is 17%. The first SGD 300,000 chargeable income is eligible for a partial tax exemption. 

Under this scenario, 75% of the first SGD 10,000 chargeable income is tax-free, and 50% of the next SGD 290,000 is tax-free.

Non-Residents’ Income Subject To Withholding Taxes

Certain non-resident income is liable to withholding tax when it is due and receivable. The applicable withholding tax rate is determined by the type of income earned and the YA involved.

Type of incomeWithholding tax rateWithholding tax rate
 From  2017 to 2023From 2024 onwards
1. Remuneration, including director’s fees received by non-resident directors22% 24% 
2. Income received by non-resident professionals (e.g., consultants, trainers, and coaches) for services performed in Singapore15% of gross income or 22% of net income 15% of gross income, or 24% of net income 
3. Income received by non-resident public entertainers for services performed in Singapore 10% concessionary rate up to 31 Mar 2022; 15% concessionary rate from 1 Apr 2022 15% concessionary rate 
4. SRS withdrawals received by non-Singapore SRS account holders22% 24%  
5. Interest, commission, fee, or other payment in connection with any loan or indebtednessa 15% reduced final withholding tax rate (subject to conditions) or 22% if reduced withholding tax rate is not applicable15% reduced final withholding tax rate (subject to conditions) or 24% if reduced withholding tax rate is not applicable
6. Royalty or other lump sum payments for the use of movable properties10% reduced final withholding tax rate (subject to conditions) or 22% if reduced withholding tax rate is not applicable10% reduced final withholding tax rate (subject to conditions) or 24% if reduced withholding tax rate is not applicable

Foreign Income Tax

Income received from employment outside of Singapore is generally not taxable. This includes income deposited into a Singapore bank account. 

Furthermore, eligible foreign-sourced income is exempt from being reported. Foreign income, on the other hand, is taxed under the following conditions:

  • Foreign employment is a byproduct of Singapore employment. This signifies that the worker must work and travel outside of Singapore. However, the post is based in Singapore.
  • The individual works for a foreign employer in Singapore.
  • The income was received in Singapore via a partnership (unless the income is exempt).
  • The individual obtained the salary while working for the Singapore government outside Singapore.
  • The individual was paid in Singapore for professional, consulting, technical or other services performed outside of Singapore that did not qualify as a fixed place of operation. 
  • This comprises temporary locations and locations utilized for preparation and auxiliary tasks to the primary service.

Income Exempt From Tax

Singapore does not tax any income that can be classified as capital gains, such as the sale of fixed assets, stocks, or bonds, or intangible assets, such as goodwill.

  1. Dividend income: Singapore does not tax dividends paid by Singapore corporations; in some situations, dividends paid by Hong Kong and Malaysian corporations are also not taxed.
  2. Inheritance: Singapore abolished inheritance tax, often known as estate duty, on the assets of a deceased individual in 2008. The following are examples of joint estate assets that are no longer taxed:
    • Immovable property
    • Bank accounts
    • Publicly traded stock 
    • Belonings in a secure deposit box 

Tax Deduction

Singapore permits the following tax deductions, in addition to the already low rates, to further lower the tax burden on individuals:

Employment Expense

Individuals can deduct expenses made as a result of their employment if the expense fits the following criteria:

  • The cost was incurred while carrying out the job’s requirements.
  • The employer did not reimburse the expense.
  • The cost was not a capital outlay (such as acquiring a fixed asset).
  • The money was not intended for personal use.

Among the deductible employment expenses are:

  • Meal expenditures.
  • Transportation costs.
  • Transportation services.
  • Reimbursements for medical expenses.
  • Housing expenses incurred as a result of employment.

Donations

Individuals can deduct donations made to approved charity organizations. Donations include the following:

  • Monetary contributions.
  • Donations of shares.
  • Donations of artifacts.
  • Donations of land and structures.

Rental Income Expenses

Individuals can claim rental income expenses under the following conditions:

  • The expense was incurred while a tenant was living in the property and was entirely for the purpose of earning rental income.
  • Tax relief for self-improvement: Singapore citizens are eligible for tax rebates and relief on the following items:
    1. Course fee alleviation – Reimbursement of course fees for individuals who invest in improving their employability by upgrading their skills.
    2. CPF Cash Top-Up – A tax break for people who save for retirement.
    3. Supplementary Retirement Scheme (SRS) Relief – A tax break designed to encourage people to save for retirement in addition to their CPF contributions.

Deduction For Angel Investors

Angel investors in Singapore can deduct their investment in new businesses or startups under the following conditions:

Within 12 months following the initial investment, the angel invests at least $100,000 in a qualifying startup company.

The angel keeps the investment for two years from the date of the last qualified investment.

Conclusion

With a clear understanding of Singapore’s income tax brackets, you’re now better equipped to plan your finances and fulfill your tax obligations.

Remember, staying informed and proactive about tax regulations not only ensures compliance but also aids in smarter financial planning. As you adapt to Singapore’s economic landscape, let this knowledge be your guide to financial savvy.

Fiscal Wisdom!

But wait! There’s lot more that you might be interested in following:

  • Tax Declaration In Singapore
  • Tax Consulting In Singapore
  • Tax Return Software In Singapore

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