Thanks to its friendly income tax rates, Singapore has - for years now - established itself as one of the principal tax havens in the globe. As the Inland Revenue Authority of Singapore (IRAS) states, the city-state’s tax policy fundamentally seeks to maintain competitive tax rates for both individuals and corporations - including foreign entities.
So far so good. But then again, how much exactly are we talking about here? Or rather, what income tax rate should you expect to pay in Singapore?
Well, that’s precisely what we’ll be answering today. This article covers not only the income tax rates for residents and non-residents, but also all the accompanying deduction benefits that you might want to capitalize on.
Income Tax Rates for Residents
As we’ve stated in our previous guides, Singapore’s tax residency status is not exclusive to domestic citizens. Rather, it covers:
- All Singapore Permanent Residents (SPR) and Singapore Citizens (SC).
- All foreigners (except company directors) who’ve stayed and worked in Singapore for at least 183 days in a tax year.
If any of these conditions apply to you, you’ll be paying the following income tax rates, which came into effect in 2017:
- For the first S$20,000, the IRAS won’t charge you anything. The income tax rate for that is 0%.
- For the next S$10,000 (S$20,001 - S$30,000), you’ll pay a tax rate of 2%.
- For the next S$10,000 (S$30,001 - S$40,000), you’ll pay a tax rate of 3.5%.
- For the next S$40,000 (S$40,001 - S$80,000), you’ll pay a tax rate of 7%.
- For the next S$40,000 (S$80,001 - S$120,000), you’ll pay a tax rate of 11.5%.
- For the next S$40,000 (S$120,001 - S$160,000), you’ll pay a tax rate of 15%.
- For the next S$40,000 (S$160,001 - S$200,000), you’ll pay a tax rate of 18%.
- For the next S$40,000 (S$200,001 - S$240,000), you’ll pay a tax rate of 19%.
- For the next S$40,000 (S$240,001 - S$280,000), you’ll pay a tax rate of 19.5%.
- For the next S$40,000 (S$280,001 - S$320,000), you’ll pay a tax rate of 20%.
- Then for anything above S$320,000, you’ll be charged a tax rate of 22%.
Income Tax Rates for Non-Residents
Non-residents, on the other hand, have varying tax rates for employment income and other forms of income.
If you’ll be working as an employee in Singapore, for instance, the IRAS will either charge you a flat tax rate of 15%, or proceed with the corresponding progressive resident tax rates- whichever turns out to be higher.
Otherwise, for other forms of income, the IRAS applies the following tax rates:
- 22% on company directors’ remuneration.
- 15% of the gross income or 22% of the net income generated from professional activities such as consultancy.
- 10% concessionary rate on income generated from public entertainment activities such as music performances.
- 22% on pension.
- 22% on SRS withdrawals.
- 22% on rental income.
Deductions for Individuals
While you pay your taxes, at least the IRAS is considerate enough to give you a wide range of tax benefits.
You can, for instance, take advantage of the following deductions and reliefs to reduce your tax bill. (Please note that they only apply to tax residents who meet the qualifying requirements.)
- Supplementary Retirement Scheme (SRS) Relief.
- Parent/ Handicapped Parent Relief.
- NSman (Self) Relief.
- Life Insurance Relief.
- Handicapped Brother/ Sister Relief.
- Earned Income Relief.
- CPF Relief.
- Course Fees Relief.
Deductions for Employees
Employees, on the other hand, get the privilege to deduct the following work-related expenses from their taxable income:
- Traveling expenses.
- Subscriptions paid to professional organizations.
- Religious dues such as mosque building funds.
- Money spent on entertaining clients.
Deductions for Sole-Proprietors, Self-Employed Individuals or Partners in a Partnership
As for sole-proprietors, self-employed individuals, and partnership partners, IRAS allows them to file deductions for:
- R&D expenditure.
- Medical expenses.
- Capital Allowances (CA) on fixed assets.
- Capital Expenditure on refurbishment and renovation works.
- Productivity and Innovation Credit (PIC)
- Business expenses.
- Business making losses and unabsorbed capital allowances.
- Expenses incurred before the business commencement.
Where to Start
Tax resident or not, Wealthbridge’s tax professionals are here to help you to start off on the right foot. Get in touch with us today to learn more about our tax planning and filing services.
Also, click here if you want to see our all-in-one guide about personal income tax in Singapore.