It is a known fact that Singapore is one country which offers tax policies which are people-friendly. The IRAS (Inland Revenue Authority of Singapore) treats the non-permanent resident of Singapore and non-Singaporeans as foreigners for income tax filing. The income tax rates in Singapore depend on the residency status of an individual. You are treated as a tax resident for a specific year if:
- You are a Foreigner who has resided/worked in Singapore for a period of 183 days or even more in the year previous to the current year.
- SPR (Singapore permanent resident) or SC (Singapore Citizen) who is residing in Singapore except for absences on a temporary basis.
Otherwise you are treated for tax purposes as a non-resident.
Tax for Non-Residents:
Employment income and Taxes:
The income tax rate for non-residents is a flat 15% of the employment income or the tax rates which are progressive, whichever works out higher.
- An individual who has taken employment on a short-term basis of 60 days is exempted from tax. This exemptions does not apply to a public entertainer, director of a company or even exercising a specific profession in Singapore.
- For employment taken from 61 days to 182 days, the income tax rate is either 15% or the resident rate, whichever works out higher.
- Consultant fees, director’s fees and any other income are charged 22% as income tax.
Income tax for Foreigners:
The IRAS (Inland Revenue Authority of Singapore) treats the non-permanent resident of Singapore and non-Singaporeans as foreigners for income tax filing. Depending on the status of tax-residency, these individuals need to pay income-tax on all the income which is derived from or accrued in Singapore.
Foreigners and Tax-residency:
The tax-residency status of a foreigner determines the income tax rate in Singapore with the cut-off period being anywhere between 60 days and 183 days.
Under the rules of tax-residency in Singapore, a foreigner is considered as a tax-resident if he/she works or stays in Singapore for a minimum of 183 days in a specific year. The number of days counted include public holidays and also weekends and any absence on a temporary basis for vacations or other holidays.
Thus the implications of tax works out to
- 183 days period of stay is a tax resident and the income tax rate is worked out in a progressive manner as the resident rates.
- A minimum of 183 days for a period of 2 years continuously, the income tax rates are progressive resident rates.
- At least 183 days for 3 years consecutively the income tax rates are progressive.
A foreigner can claim tax reliefs when filling the B1 form which is applicable to all tax-residents, the income brought by her/him which is foreign-sourced is exempted from tax.
NOR (Not Ordinary Scheme):
NOR (Not ordinary Residents) are a specific category of individuals in Singapore who are offered a tax treatment which is favorable for 5 years.
The eligibility for this is
*A Singapore non-resident for the purpose of taxes for assessment in the past three years.
*In the specific assessment year in which a person is qualified for the NOR status, he/she should be a tax-resident of Singapore.
In order to retain this status of NOR, the individual needs to be a tax resident only in the first assessment year and not for the total 5 year period of qualifying.
Benefits of the NOR Scheme:
The income tax is paid by the NOR only on a specific employment income part which is corresponding to the days spent in Singapore provided he spent 90 days minimum out of Singapore for reasons of business and has his/her Singapore employment income is a minimum of $160,000.
The NOR enjoys exemption of tax on the employer’s contributions to a pension fund which is overseas and not mandatory, which is otherwise taxable.
Individuals required filing Tax:
Singapore residents can e-file the completed form from first of March to eighteenth of April every year. In case of choosing to paper file the returns you need to submit the specific form by fifteenth of April every year.
Notification to file Income Tax Returns:
If you receive a SMS or a letter from the IRAS informing you to file an income tax return you need to do so on time. This is immaterial whether your employer participates in the AIS (Auto-Inclusion Scheme) for Employment Income or your earning in the year before.
Your income tax filing requirement can be checked by logging on to myTaxPortal with the help of your SingPass.
Selecting NFS (No-Filing Service):
You are not to file any income tax return if you receive a SMS which informs you of your selection to the NFS.
Your tax bill or NOA (Notice of Assessment) is sent between April and September. This NOA is computed on the basis of the auto-included income and relief claims of the previous year which is adjusted in accordance to the criteria of eligibility.
You need to ensure the accuracy of the NOA if you have any income which is not mentioned in the NOA or even if the claim for the relief in the NOA is not correct. This needs to be informed to the authorities within a time span of 30 days.
AIS (Auto Inclusion Scheme):
If the employer participates in the AIS there is no requirement of filing the income tax return for the income from this specific employer. The information of the income is submitted by the employer via e-submit which is included automatically in the income tax assessment.
You need to file an income tax return if you receive any notification.
The IRAS has made it compulsory to file all income tax returns by the 15th of April every year. The deadline is extended for a period of 3 more days if the individual uses the e-filing of the IRAS portal.
The filing date can be extended under exceptional circumstances, for which, you need to send an application to the IRAS by the 31st of March. You need to ensure you mention the reasons for the extension along with other details like tax reference number, full name along with an approximate chargeable income.