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Important Taxation Facts You Need to Know Before You Go to Singapore

Last modified: April 13, 2018
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Taxation-FactsLiberal Singapore taxation is one of the reasons behind the foreign entities’ move to this business hub. They want to capitalize, in addition to many other things, on easier and affordable tax rates. The foreign corporate, especially, Small and Medium Enterprises (SMEs) and individual entrepreneurs choose to incorporate or extend their business to Singapore.

Singapore Taxation System

The Singapore tax authorities have taken a liberal view of the situation and have made their tax regime easier to cope with for the taxpayers. Singapore tax filing is an easier affair for the honest business owners if they hire reputed Singapore accounting firm, even though, the authorities are strict about implementing the tax rules. This has attracted hoards of investors and entrepreneurs and direct foreign investment to Singapore making it one of the rich nations in Asia.

Low Tax Rates

Singapore is known for its low tax rates and there are not that many taxes to cope with. Most importantly, this island country prefers territorial taxation regime. It means that income generated in Singapore is taxed and barring a few exceptional situations, that earned abroad goes tax-free.

Corporate Income Tax in Singapore

  • The company income tax rates in Singapore are in the range of 0% – 17%. They, after discharging their tax liability, are free to distribute the dividend to their shareholders.
  • The company income tax is a single-tier tax. The benefit is that the shareholders do not have to pay any tax on the dividends received.
  • There is yet another reason why investors favor Singapore. This country does not apply wealth or inheritance tax. The capital gains are not taxed in Singapore.

Individual Income Tax Rates in Singapore

  • The prevailing personal tax rates for the current year are in the range of 0% – 20%. The due date for filing Singapore personal income tax is April 15 of each year.
  • However from the Assessment Year 2017, the tax range is going to be 0% – 22%. The rates for the taxpayers having chargeable income above S$160,000 have also been increased in the new personal income tax structure.
  • Singapore assesses income tax on the preceding year basis. Therefore, those earning in excess of S$320,000 in the year 2016 will have to pay 22% of the tax in the assessment year 2017.

Income Tax for Nonresidents
The tax amount of each Singaporean individual taxpayer also depends on their residency.

  • The income of non-residents in Singapore for 60 or fewer days is not taxed.
  • The income of non-residents in Singapore for 61-182 days is taxed at the flat rate of 15% or at the resident’s rate (0% – 20%) whichever resolves the higher tax amount.
  • From the assessment year of 2017, these individuals, barring few exceptions, will also pay their taxes at increased rate of 22%.
  • The foreigners in Singapore for more than 182 days are considered residents for the tax purposes and their income is charged at the residents rates.
  • Non-resident public entertainers have to pay their taxes at 10% of concessionary income tax rate.

Singapore Property Tax

The property tax rates in Singapore are progressive. The rates for the owner-occupied homes are in the range of 0% – 16%. The property tax rates for non-owner-occupied homes are in the range of 10% – 20%.

GST: Goods and Services Tax in Singapore

GST is a consumption tax applied to the imports and consumption of goods and services in Singapore. This an indirect tax. Its current rate is 7%. The businesses, depending on their turnover can think of opting for GST registration in Singapore.

Foreign Tax Credits

If a company has to pay taxes on its earnings in another country. It can claim foreign tax credits.

Painless Singapore Tax Filing

Even though Singapore taxation is simple and the efforts were made to weed out the complexities in favor of taxpayers, it is prudent to take the assistance of the Singapore tax services.

The certified accountants hired by the firms do help their clients in ensuring trouble free Singapore tax filing. In reality, their vast experience may even be able them to use prevailing taxation rules and regulations to save a few more Singapore dollars for you.

The Singapore tax authorities extend wholehearted support to the local companies. It has signed as many as 70 Double Taxation Avoidance treaties and other international treaties that are favorable to the business with other countries. It simplifies the cross-border trade for the Singaporean companies.

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