Unlike flat tax rate for corporate entities, personal tax rates in Singapore are progressive; which means that higher tax rate is charged from higher income earners. The lowest tax rate for individual taxpayers is 0% while the highest tax rate reaches up to 22%.
TAX RESIDENCY STATUS
An individual is considered as the resident of Singapore in one tax year if he/she:
- Is a citizen of Singapore or has a habitual abode in Singapore;
- Has a permanent establishment (PE) in Singapore; or
- Has spent at least 183 days in Singapore in that tax year.
Different income tax rules apply to different individuals, depending on their tax residence status in Singapore and nature of taxable income. Tax is generally charged on taxable or chargeable income of individuals i.e. income after deduction of eligible expenses, donations and personal reliefs. Following categories of income come under the scope of personal taxation:
- Income from Salary
- Income from business, trade, profession, occupation or vocation either as a sole-proprietor or through partnership firm
- Profit on debt, dividends, capital gains, interest on investment income
- Income from properties (rent, royalty, premium and other such profits)
Filing of annual income tax return is mandatory for those individuals who earn $22,000 or more in a tax year. All completed forms should be submitted (either online or offline) to Singapore tax department by 15th of April every year. After filling of self-assessed tax returns, a notice of assessment is received from tax authorities, indicating the amount of tax the individual has to pay. If the individual disagrees with the assessed amount, he/she is given the opportunity to submit his response within 30 days of receiving the assessment notice. Regardless of this, the individual needs to pay the assessed amount of tax within 30 days of receiving the notice; otherwise, penalties are being imposed on outstanding tax liability.
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