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An Introduction to Singapore Taxation

AN INTRODUCTION TO SINGAPORE TAXATION

The Inland Revenue Authority of Singapore (IRAS) is the governing body for all taxation matters.
Personal Income Tax

Income tax is payable on both Singapore-sourced and foreign-sourced income received in Singapore. Exemptions may apply to certain foreign-sourced income. Income tax rates depend on an individual's tax residency status. An individual will be treated as a tax resident for a particular Year of Assessment (YA) if he or she is a:

  • Singapore Citizen who normally resides in Singapore except for temporary absences; or
  • Singapore Permanent Resident who has established his/her permanent home in Singapore; or
  • Foreigner who has stayed/worked in Singapore (excludes director of a company) for 183 days or more in the previous year.

The Singapore personal income tax rate is progressive, and ranges from 2% to 22%. If the individual does not satisfy the residency criteria, he or she will be treated as a non-resident of Singapore for tax purposes. The employment income of non-residents is taxed at flat rate of 15% or the progressive resident tax rates, whichever is higher.

Corporate Income Tax

Companies incorporated in Singapore and foreign corporations are liable for tax at the prevailing tax rate of 17% of the chargeable income accruing, derived or received in Singapore. Certain corporate tax reliefs and provisions are available for qualifying businesses, subject to certain terms and conditions.

Goods and Services Tax (GST)

GST is a broad-based consumption tax imposed on the supply of goods or services in Singapore. The prevailing GST rate is 7%. GST registration in required only if:

  • Turnover is more than S$1 million for the past 12 months; or
  • Turnover is expected to exceed S$1 million for the next 12 months

GST-registered businesses are required to charge GST at the prevailing rate on the supply of goods and services in Singapore, unless these goods and services can be zero-rated or exempted under GST laws. The GST that the business charges and collects is known as output tax, which must be paid to IRAS. Conversely, GST incurred on business purchases and expenses is known as input tax. GST-registered businesses are entitled to claim input tax, subject to certain terms and conditions.



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