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Personal taxation rates in Singapore are moderate and progressive. Individuals who earn employment income generally are provided with earned income relief in varying amounts. Additionally, there are several other types of tax reliefs.

Both employers and employees must make monthly contributions to the Central Provident Fund (CPF). Foreign employees (neither permanent residents nor citizens) and their employers are not required to contribute to the CPF. The employee's contribution may be deducted against income and the employer's contribution is tax-exempt unless the contribution exceeds the statutory limit.

A Singapore citizen is a tax resident in Singapore if that citizen normally resides in Singapore except for temporary absences that are consistent with the claim to be a resident.

A foreigner will be regarded as resident in Singapore if that foreigner is physically present or exercising an employment in Singapore for 183 days or more during the year preceding the year of assessment in a capacity other than that of a director of a company.

All foreign-source income received in Singapore by resident individuals is exempt-in other words, Singapore taxes individuals on a purely territorial basis. Only income derived in Singapore is subject to tax.

Taxable income and rates
Personal taxation is imposed at progressive rates ranging from 3.5% to 20%. An individual who earns income, whether from regular employment or self-employment, is given an earned income relief of SGD 1,000 for individuals younger than age 55; SGD 3,000 for those aged 55¬59; and SGD 4,000 for those aged 60 and older. There are several other types of tax reliefs such as wife relief, child relief, parent relief, grandparent caregiver relief and handicapped brother/sister relief.

Determination of taxable income
Income includes gains or profits from a trade or profession and earnings from employment (including value of employer-provided food, clothing or housing and allowances other than for subsistence, transport, travel or entertainment).

Dividends paid by companies under the one-tier tax system are tax-exempt. Additionally, interest on standard deposits are exempt and individual inventors qualify for a 90% exemption on income from royalties.

Interest income derived on or after 1 January 2005 by an individual from the deposit of money in a standard savings, current or fixed deposit account with an approved bank or finance company in Singapore is exempt from tax.

Net rental income derived from property located in Singapore is aggregated with other income and subject to Singapore taxation.

Special expatriate tax regime
To attract global talent to Singapore and to encourage companies to use Singapore as their base for regional activities, the country introduced a Not Ordinarily Resident (NOR) Taxpayer Scheme. To qualify for the NOR scheme, an individual must be tax resident in the current year of assessment and must not have been tax residents in the three years of assessment immediately before that year of assessment. Individuals meeting criterion are granted NOR status for five consecutive assessment years, starting from the assessment year in which they first qualified.

The tax incentives under the NOR scheme includes the following:

  • Individuals are not subject to tax on the portion of Singapore employment income that corresponds to the number of days an individual has spent outside Singapore for business purposes pursuant to the individual's Singapore employment, provided: (1) the individual spends at least 90 days outside Singapore for business purposes pursuant to the Singapore employment; and (2) with effect from income year 2008, the employee's Singapore employment threshold is at least SGD 160,000. 

    In addition, where the tax on the apportioned income is below 10% of the employee's total employment income, the employee is subject to tax based on the floor rate of 10% of total employment income.

  • The employer's contribution to a non-mandatory overseas pension fund or social security scheme is tax-exempt, subject to the CPF capping rules. With effect from 2008, the employee must derive a minimum Singapore employment income of SGD 160,000 and the employer must not claim a tax deduction for the contributions up to the NOR cap to enjoy the exemption

Area-representative status, which the IRAS grants to employees of nonresident companies with a representative office in Singapore, can reduce taxes considerably for expatriate employees who perform a major part of their responsibilities outside Singapore. Such individuals are taxed on the total taxable income pro rated for the number of days they are physically in the country. However, benefits in kind such as housing provided in Singapore are fully taxable.

Capital taxes
Property tax is levied on all immovable property in Singapore and is payable annually by the owners at the beginning of the year. Immovable property includes Housing Development Board flats, houses, offices, factories, shops and land. The annual property tax is calculated based on a percentage (tax rate) of the gross annual value of the property as determined by the property tax department. The property tax rate is 4% for owner occupied residential property and 10% for others. A property tax exemption for land under development may be granted in certain cases.


Source: Deloitte

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