singapore-individual_income_tax

Individual Income Tax (Foreigner, Non-Tax Resident)
If you are in Singapore for less than 183 days...

If you are here for less than 183 days in a year
The amount of tax you have to pay depends on how much you have earned.

If You are Employed for 60 Days or Less in a Year
You will be regarded as a non-resident. Your employment income is exempt from tax if you are here on short-term employment. The number of days in Singapore include weekends and public holidays. This exemption does not apply if you are a director of a company, a public entertainer or exercising a profession in Singapore. Professionals include foreign experts, foreign speakers, queen's counsels, consultants, trainers, coaches etc.

If You are Here for 61 Days to 182 Days in a Year
You will be regarded as a non-resident. The number of days in Singapore include weekends and public holidays.
As a non-resident:
- You will only be taxed on all income earned in Singapore.
- You will not be entitled to tax reliefs.
- Your employment income will be taxed at a flat rate of 15% or the progressive resident rates depending on which results in a higher tax.
- Director's fees and other income such as dividends, rent, etc. earned in or derived from Singapore will be taxed at the prevailing rate of 20%.
- You are required to fill in Form M (Income Tax Return for Non-Residents)

What is Taxable?
1) Annuity (recurring annual income)
An annuity is a continuous yearly payment, arising from any of the following:
- Annuity policy bought from an insurance company
- Gift or inheritance
- Payment for sale of an asset or surrender of a right

All annuities received in Singapore are not taxable unless they are received from the following sources:
- Partnership
- Supplementary Retirement Scheme (SRS)

Annuity policy bought by your employer, in place of a pension or other employment benefits which are payable to you during employment or upon retirement.

Depending on the source of your annuity, you will be taxed on:
- 3% of the total amount you paid for the annuity; or
- Full amount of annuity received if the total amount received is equal to the total amount you paid for the annuity; or
- 50% of the annuity payouts received from SRS.

2) Charge (alimony/maintenance payments)
Charge refers to income received under a deed or court order in Singapore. Some examples of charge includes:
- Alimony/maintenance payments
- Income from separation deed or order

This income is taxable.

3) Dividend
Dividends are distributions by a company to its shareholders. It represents returns on shareholder's capital, which may be paid in cash or in kind. For instance, a company may pay its shareholders in the form of company's shares.

Dividends derived in Singapore are taxable unless they are specifically exempted under the Income Tax Act.

Dividends exempt from tax
Dividends are not taxable if they are
- Foreign dividends received in Singapore on or after 1 Jan 2004. This excludes foreign source income received through partnerships in Singapore.
- Income distributions from unit trusts and real estate investment trusts (REIT), that are authorised under Section 286 of the Securities and Futures Act (excludes distributions out of franked dividends) on or after 1 Jan 2004.
- One-tier exempt dividends from companies under the one-tier corporate tax system.

You need to declare the taxable dividends under 'other income', and the amount of tax deducted (please refer to your dividend vouchers/statements) under ‘Singapore tax deducted at source’ in your tax form.

However, if you hold a Singapore NRIC, the relevant companies paying the dividends will provide information on your taxable dividends to us. You need not declare the dividends (this does not apply to dividends received by joint account holders or where shares are held through nominees).

If you received dividends from joint accounts or shares held through nominees, you need to declare the dividends in your tax form.

4) Employment Income
Employment income refers to gains or profits (whether in money or other forms) you earned from your employment.
Salary is the payment (whether in money or other form) you received or was granted for services you provided to your employer.

Bonus
You may receive contractual and/or non-contractual bonus from your employment. Bonuses subject to income tax but are taxed at different points in time as explained below:

Contractual bonus is payable according to the terms stated in your employment contract. It is treated as income of the year you gave your services, as specified in the contract. This is regardless of when your employer pays you the bonus.

Non-contractual bonus is payable at the discretion of your employer. It is treated as income of the year in which your employer announced that it's payable. This is regardless of when your employer pays you the bonus.

Director's fee
Your director's fees will be treated as income of the year in which they become due and payable. That is, your director's fee is deemed to be your income on the date they are voted and approved at the company's annual general meeting.

Commission
Commission is a payment you received for services you provided. It is taxable and must be reported in your tax form.

Other employment income
Other employment income may include allowances and benefits-in-kind given by your employer.

Allowances
You may receive transport allowance, meal allowance and etc. from your employment. They are taxable.

Benefit-in-kind
Generally, it refers to benefits provided by your employer in place of cash. They are taxable.

Salary in-lieu of notice/notice pay
Payment in lieu of notice to compensate you for early resignation or early termination of contract is taxable. They are not deductible against your employment income. You cannot claim them as employment expenses.

Retrenchment and retirement benefits
As an employee, you may receive Retrenchment benefits when your employer no longer needs your services; or Retirement benefits when you reached your retirement age.

Retrenchment benefits
Retrenchment benefits are payments given by employers to compensate for the loss of employment. Payments to compensate employees for the loss of employment are not taxable as they are capital in nature.

Some employers may pay their employees lump sum payments that consist of payment for loss of employment and other payments that are taxable.

If you received any payments (such as salary in-lieu of notice, gratuity, ex-gratia and etc.) apart from the payment for loss of employment, they will be subject to tax.

Retirement benefits
All retirement benefits including gratuities and pensions are taxable unless they are specifically exempted under the Income Tax Act.

Retirement benefits are not taxable if they are received from the following tax exempt pension schemes/funds:
- Government pension schemes under any written law relating to pensions in Singapore (including the Pensions Act, Singapore Armed Forces Act and Parliamentary Pensions Act).
- CPF/designated funds.
- If you participate in existing approved pension and provident funds, the retirement benefits accrued from such funds up to 31 Dec 1992 will remain tax-exempt. The tax-exemption will apply when they are paid out on the date of retirement based on the statutory retirement age.

Before retirement, you are taxable on the total amount of retirement benefits received. You are not eligible for the tax exemption.

After retirement, you are taxable only on funds accrued from 1 Jan 1993 to date of retirement. The funds will be taxed at the time the benefits are received.

Gains from exercise of stock options
As an employee, you may receive,

Employee Share Option (ESOP)
An employee who is granted share options by an employer is subject to tax on any gains or profits arising from the exercise of the share option. This also applies to any other person who is granted share options as a result of any office held by him (e.g. a director or an external auditor).

Other Forms of Employee Share Ownership (ESOW) Plan
ESOW plans are plans that allow an employee of a company to own or purchase shares in the company or in its parent company. They include share awards and other similar forms of employee share purchase plans (excluding phantom shares and share appreciation rights).

5) Estate/Trust Income
Estate/trust income are income received in Singapore, from an estate under administration or a trust. These income are taxable.

Beneficiary of Estate Income
Non-Resident Beneficiary
If you are a non-resident beneficiary of an estate, tax on your share of income distribution will be paid by the personal representative of the estate.

Resident Beneficiary
When the personal representative of an estate distributes income from an estate under administration, the source of the income has changed. In the hands of the beneficiary it is a distribution of estate income. Therefore tax exemptions applicable to individuals do not apply to income derived from estates that are still under administration.
Income distribution from an estate is taxable on the beneficiary in the year he/she receives it and not the year the income is accrued to the personal representative.

Beneficiary of Trust Income
Non-Resident Beneficiary
If you are a non-resident beneficiary, tax on your share of entitlement or income distribution will be paid by the trustee of the trust.

Before Year of Assessment 2008
If you are in receipt of taxable trust income or entitled¹ to trust income, you are required to declare the amount in your personal income tax forms under 'Others' as a charge. Generally, capital receipts (such as sale proceeds from properties/shares, insurance monies) are not taxable. Please do not declare such receipts in your forms.

Effective from Year of Assessment 2008
With effect from the Year of Assessment 2008, beneficiaries who are in receipt of or entitled¹ to trust income will enjoy tax exemption on sources of income applicable to individuals.
If the trust is only in receipt of income (such as approved bank interest and foreign-sourced income) that is exempted from tax at the individual taxpayer's level, you will also enjoy the exemption. Please do not declare such exempt income.

6) Gains From Sale Of Property
Generally, the gains derived from the sale of a property in Singapore is not taxable as it is a capital gain.

When a person is deemed to be trading in properties, the gains from the sale of property in Singapore is income and it is taxable. As to whether a person is deemed to be carrying on a trade, it depends on the circumstances of that individual.

To determine if a person is trading in properties, IRAS applies a set of guidelines known as the "badges of trade". There are criteria under the badges of trade and IRAS considers all facts of each case to determine whether the gains are taxable. Examples of the criteria are as follows:
- Frequency of transactions (buying and selling of properties)
- Reasons for acquiring and selling of property
- Financial means to hold the property for long term
- Holding period

7) Income received from outside Singapore
Generally, overseas income received in Singapore on or after 1 Jan 2004 is not taxable. These include overseas income paid into a Singapore bank account. You do not need to declare overseas income that is not taxable.

Overseas income is taxable in Singapore if...
- It is received in Singapore through partnerships in Singapore.
- Your overseas employment is incidental to your Singapore employment. That is, as part of your work here, you need to travel overseas.
- You are employed outside Singapore on behalf of Government of Singapore.

8) Pension
Pension is a payment made to an individual after his retirement.
Government pensions - The full sum of government pensions received in Singapore is exempt from tax if you are a Singapore tax resident.
Pensions from approved pension schemes - The amount of pension accrued up to 31 Dec 1992 in the approved funds in Singapore is exempt from tax if you retired at the normal retirement age stated in the pension or provident funds/schemes.

You will be taxed on that part of the pension paid out of contributions made to the funds after 31 Dec 1992.
For instance, if there was $100,000 in your pension fund as at 30 Dec1992 and your ex-employer made another payment of $100,000 to your pension fund on 3 Mar 1993, amounts paid out of the second $100,000 is taxable.

9) Rent & Net Annual Value (NAV) from property (real estate)

Rent
Rent received from the letting of property in Singapore is subject to income tax, while your property is subject to property tax. Your rental income includes rent of the premises, maintenance, furniture and fittings. After deductions for allowable expenses (such as property tax), the net amount is taxable.

Gross rent - Total allowable expenses = Net taxable rent

For jointly owned property
The rental income is taxed on all the joint owners based on their share in the property. It does not matter which party receives the rent or whether the owners paid for the property. This also applies to rental loss. The rental loss is apportioned to joint owners based on their share in the property.

Net Annual Value (NAV)
NAV is the annual value (as shown in your property tax bill) of your property in Singapore less allowable expenses. Annual value is the gross amount at which the property can be expected to be rented from year to year.

Annual value - Total allowable expenses = NAV

NAV of a property is taxable if it is used by the owner or on behalf of the owner for residential purposes, and not for the purpose of producing profit (business purpose) in Singapore. However, an annual exemption of up to $150,000 is allowed to the NAV of one property, which is occupied by the owner. Any excess above $150,000 is taxable.

10) Royalty
Royalty is the income received for the right to use:
- Copyrights
- Patents
- Trademarks and etc.

Royalty earned in Singapore is taxable.

Royalty is earned in Singapore if…
- It is paid directly or indirectly by a person resident in Singapore or by a permanent establishment in Singapore.
- It is deductible against any income earned in or derived from Singapore.

Tax concession
To qualify for the tax concession, the royalties must be received for :
- any literary dramatic, musical or artistic work: or
- approved intellectual property or approved innovation

If you qualify for the tax concession, you wll be taxed on the lesser of :
- amount of royalties after allowable deductions; or
- 10% of the gross royalties.

The tax concession does not apply to royalties or payment received for any work published in any newspaper or periodical.

If you are leaving Singapore
Your employer has to seek tax clearance if you are leaving Singapore for any of the following reasons:
- Ceasing your employment in Singapore
- Posted overseas, and rendering service overseas
- Leaving Singapore for any other reasons for any period exceeding three months

Claiming Exemption Under Tax Treaty
What is the Avoidance of Double Taxation Agreement (DTA)?
The Avoidance of Double Taxation Agreement (DTA) is an agreement signed between Singapore and another country that serves to relieve double taxation of income earned in one country by a resident of the other country.

It states clearly the taxing rights between Singapore and her treaty partner on different types of income arising from cross-border economic activities between the two countries.

The DTA also provides for tax reduction or exemption on certain types of income.

A treaty country refers to a country that has signed a DTA with Singapore. Only the tax residents of Singapore and the respective treaty country can enjoy the benefits of a DTA.

If you are a tax resident of a treaty country
If you are a tax resident of a foreign country that has concluded a tax treaty with Singapore, you may be protected from being taxed twice on the same income in Singapore.

With this tax treaty, you may claim the benefits of an exemption from the tax on income for personal services, teachers, researchers, artistes, athletes, students, trainees, etc.

As the provisions for each DTA may be different, you need to refer to each tax treaty for the specific provisions applicable to you. For example, when you are a non-resident in Singapore, you may want to consider the tax treaty if:
- You receive interest, dividends, or royalties.
- You have stayed in Singapore for less than 183 days and earned income not paid and not borne by an employer or their permanent establishment in Singapore.
- You have earned income under the status of an overseas student.

How do I apply for the benefits under the DTA?
To claim the benefits, you have to prove that you are a tax resident of the treaty country by submitting the Claim from Exemption from Singapore Income Tax Under Avoidance of Double Taxation Agreement - Format for Certificate of Residence from Non-Residents. Before submission to IRAS, this form must be completed and duly certified by the tax authority of your country of residence.

See Tax Treaty for more information.

Last Updated: 09 November 2008