Here's what newcomers and expatriates need to know about personal tax rates in Singapore.
Singapore is famous as a low-tax destination, when it comes to expatriates. True, the high cost of housing and living may counterbalance that, but look on the upside: once you learn to live like a local, you can combine that with the low tax to really save money.
Here are the tax rules expats in Singapore need to know:
First, Check Your Tax Residency Status
The amount of income tax you pay depends on your tax residency status. You pay taxes as a regular tax resident if your period of stay (inclusive of work) in Singapore is at least 183 days, and you are employed for more than 60 days.
If you reside in Singapore for between 61 to 182 days, then you will be taxed at a non-resident rate. If you were employed for 60 or fewer days during this time, and you are not the director of a company, you will be exempt from income tax.
For example, say you lived in Singapore for at least 183 days in 2015 and 2016, and you were employed for more than 60 days each time. In 2017, you were in Singapore for only 100 days, and were employed for 30 days.
In such a case, you would have counted as a tax resident on 2015 and 2016, and would have paid income tax as a tax resident.
However, you would have been considered a non-resident during 2017, and paid non-resident tax rates.
Note that this is only relevant to non-directors. If you are the director of a business, you should contact a tax agent for more advanced help. You can find the general tax rates for non-resident business directors here.
What is the Resident Tax Rate in Singapore?
Singapore’s resident tax rate is based on your annual income. Refer to the following table for a quick run-down:
Source: Inland Revenue Authority of Singapore
Note that tax residents may claim tax deductions (tax relief). The full list of available tax deductions can be found here.
What is the Non-resident Tax Rate in Singapore?
Non-resident tax rates are more straightforward. It is a flat 15 per cent of your annual income, or the amount you would pay using the resident rate (see above), whichever is higher.
If you are the non-resident director of a business, your director’s fees and other income are taxed at 22 per cent.
If you are a non-resident, and not a company director, and also worked for 60 days or less, you are exempt from income tax.
A Note on Stock Options and Housing
There is no capital gains tax in Singapore, so you never need to worry about taxes for selling appreciated stock. However, if your company offers you stock options and you exercise them, this counts as part of your taxable income.
Likewise, note that housing allowances also count as part of taxable income.