The Ultimate Guide to Tax Treatment of Income Earned Overseas

As a global business hub, Singapore happens to host quite a number of multinational companies with networks across the world. Now, with that comes a lot of benefits - for instance, while the city-state continues to attract foreign workers and businesses, Singapore citizens themselves are increasingly securing jobs overseas. 

It’s worth noting, though, that the tax obligations for overseas workers are not the same as those for foreigners employed in Singapore. This article expounds on the issue by explaining how the Inland Revenue Authority of Singapore (IRAS) treats income earned overseas. 

Overseas Employment Taxes

Thankfully, the IRAS is considerate enough to save you the pain of double taxation. It turns out that overseas workers are not required to pay taxes in Singapore. 

And yes, that’s the case even when you receive your job dues via a Singapore bank account. Since the 1st of January 2004, the IRAS has kept its hands off all forms of income sourced outside Singapore. 

And that’s not all. As a matter of fact, you don’t even need to declare your overseas income, or have your employer fill the Form IR8A. 

But then get this. Not every single overseas worker is completely exempted. According to the IRAS, there are special circumstances that’ll make your overseas income taxable. Here are the details…

Exercising Employment in Singapore as Part of Your Overseas Contract

If you end up being assigned to work in Singapore as part of your overseas employment contract, your tax obligations will be as follows: 

• You won’t be required to pay taxes on your employment income if the Singapore job assignment lasts 60 days or less in a calendar year. 
• You’ll be considered a non-resident taxpayer if your Singapore job assignment takes 61 to 182 days. That means your employment income will be subjected to the non-resident tax rate of 15%, or possibly, the corresponding progressive resident tax rates - whichever adds up to a higher amount. 
• You’ll be regarded as a tax resident if your Singapore job assignment keeps you in the country for 183 days or more in a calendar year. That means you’ll pay the progressive resident tax rates of 0-22% on your employment income, as well as get the privilege of capitalizing on Singapore’s tax reliefs and benefits.

Taxable Overseas Income

Overall, you can expect to pay taxes on your overseas income if: 

• Your overseas assignment is part of your Singapore employment. 
• Your overseas income is remitted via a partnership in Singapore. 
• Your overseas income is generated from international activities that are part of your Singapore business. 
• You’re contracted to work overseas by the Government of Singapore. 
• You happen to work in Singapore for a foreign employer.

To learn more about what is taxable and non-taxable income, click here.

Where Do You Lie? 

To find out where you lie as an overseas worker, you can go ahead and reach out to Wealthbridge or you can check our personal income tax guide to learn more about how you should work on your taxes in Singapore. Our professional tax experts will advise you accordingly on your tax obligations, as well as let you in on a couple of tricks that’ll minimize your Singapore tax bill.