Intertrust N: How to Navigate the Singapore Tax System

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Singapore’s tax system is favorable, but making it work for foreign businesses and employees requires specialist local knowledge

One of the foundations of Singapore’s economic success is its welcoming attitude towards foreign talent and international business. This policy is clearly working – almost half of the Asian headquarters of multinationals are based in Singapore.

For foreign companies, Singapore is a gateway to wider Asia-Pacific markets. The city-state’s Changi Airport is regularly quoted as the most connected in Asia.

Singapore’s welcoming attitude is embodied in some of the most business-friendly tax policies in the world, with a basic corporate tax rate of 17%. In reality, many companies pay less thanks to exemptions.

Meanwhile, individuals are taxed progressively at a rate of between 0% and 22% (24% from 2023) and on income accrued or derived from Singapore.

For businesses and individuals, Singapore’s tax system is attractive and relatively straightforward. However, there is a degree of complexity, particularly for foreign entities and their employees who are new to Singapore’s tax system.

People who are new to and unfamiliar with Singapore’s tax system are advised to seek local expertise to ensure their tax returns are filed accurately and on time, making the most of all the benefits. , administrative concessions and exemptions that apply.

Singapore corporate tax return

The Singaporean government makes no secret of its desire to attract multinational companies, promoting the island state as a stable, law-abiding and well-connected gateway to the Asian continent.

In this context, corporate tax laws are continuously revised. The tax system is fair, transparent and treats large and small businesses roughly the same.

A base corporate tax rate of 17% applies at all levels and can often be reduced to 0% if companies take advantage of a range of potential benefits, tax incentives and exemptions.

Predictably, the tax system favors resident companies over those registered as local branches of international organizations, but the regime is attractive to any company that wants a solid base for growth in Asia.

A particular advantage for companies in Singapore and those who invest there is the proactive approach to tax treaties. The city-state has signed double taxation avoidance agreements (DTAs), limited DTAs that only apply to certain types of income, and information exchange agreements with approximately 100 jurisdictions. These include regional neighbors such as Malaysia, Indonesia, the Philippines and Vietnam.

Personal income tax in Singapore

Singapore residents pay a progressive tax rate of between 0% and 22%, based on income generated or sourced in Singapore.

However, the highest rates are about to increase. A recent budget increased tax on the part of taxable income between SGD 500,000 and SGD 1 million to 23%, while the part above SGD 1 million rose to 24%. These changes come into force from 2023.

Income tax in Singapore only applies to income above SGD 20,000.

Singapore’s tax system is a little more complicated for non-residents, who pay a basic rate of at least 15%, or the corresponding progressive tax rate if higher. But the tax is only due on income originating or originating in Singapore.

To be considered residents for tax purposes, individuals must live or work in the state for at least 183 days in a single year or continuously for three consecutive years. A person who works in Singapore for a continuous period over two calendar years totaling at least 183 days is also eligible.

An obvious advantage for residents and non-residents alike is the absence of capital gains tax – individuals pay no tax on the sale of property, stocks, antiques or gifts. other assets if these are isolated and infrequent events. This distinguishes Singapore’s tax system from that of many major economies.

Like their corporate counterparts, personal taxes are constantly reviewed for greater transparency, simplicity and their effect on the wider economy.

A recent development has made Singapore’s tax system a little less generous for foreign employees. The government unexpectedly announced the abolition of non-ordinary resident (NOR) status in 2019, a tax exemption scheme in place since 2002.

NOR aimed to attract foreign nationals with regional roles. It has simplified the process to avoid double taxation for employees of international companies who have spent a significant amount of time traveling and working outside of Singapore.

Even with the removal of the NOR, Singapore’s tax system for individuals remains among the most attractive in the Asia-Pacific region.

Tax filing in Singapore: how Intertrust Group can help you

  • The removal of NOR underscored the importance of local knowledge in navigating the intricacies of Singapore’s tax system. Intertrust Group has the experience and expertise to help international companies and their employees in Singapore make the most of the benefits, administrative concessions and exemptions available.

  • Singapore is ahead of much of the world in digitizing its tax system, but accessing and being approved by the system can be complex and time-consuming, especially for foreign nationals and businesses. Intertrust Group can relieve you of this headache.

  • For individuals, the deadline for filing tax returns in Singapore is mid-April. Corporate tax returns can be filed starting in June. Either way, Intertrust Group can help make the process as easy, painless and cost effective as possible.

  • Businesses that use bookkeeping and accounting, corporate secretarial, or other Intertrust Group services find it convenient that the same trusted vendor also files corporate and personal tax returns.

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