A Guide To Singapore’s Taxation System
By Celestine Loh, Updated: 2023-11-24 (published on 2020-10-15)
Singapore is well known for its highly attractive personal and corporate tax rates, attracting international businesses and hopeful individuals to invest and do business on her shores.
Before doing business in Singapore, it is important to know the general business and personal tax rates in order to ensure a smooth financial process for you and your business.
Read on to find out the types of taxes and Singapore’s taxation system:
In Singapore, all profits are taxable as long as it was derived or originated from Singapore and will be taxed accordingly to the tax rates implemented. Additionally, foreign-sourced income, depending on whether it was remitted in Singapore, might also be taxable under Singapore’s taxation system.
Singapore’s taxation system is managed by the Inland Reserves Authority of Singapore (IRAS). The tax year for personal tax rates follows the classic calendar year, 1st January to 31st December, while for corporate tax rate, companies are able to file taxes according to their financial year.
Corporate Tax Rates
Singapore’s corporate tax rate is 17%, but due to the plentiful tax incentives and tax breaks, the effective tax rate calculated for many Singapore companies is much lower.
|INCOME RANGE||TAX RATE|
|Corporate profits (up to SGD 300,000)||Effective tax rate of 8%|
|Corporate profits (above SGD 300,000)||17%|
|Capital gains accrued||0%|
|Dividend distributions to company’s shareholders||0%|
|Foreign-sources income that is not remitted in Singapore||0%|
|Foreign-sources income that is remitted in Singapore||0% – 17% subject to conditions|
Personal Tax Rates
The personal tax rate is on progressive scale from 0% to 22%.
|On first SGD 20,000||0%|
|For the next SGD 10,000||2%|
|For the next SGD 10,000||3.5%|
|For the next SGD 40,000||7%|
|For the next SGD 40,000||11.5%|
|For the next SGD 40,000||15%|
|For the next SGD 40,000||18%|
|For the next SGD 40,000||19%|
|For the next SGD 40,000||19.5%|
|For the next SGD 40,000||20%|
|Above SGD 320,000||22%|
|Dividends received from Singapore registered companies||0%|
Goods and Services
The government levies a 7% goods and services tax.
Singapore levies withholding tax as a way to collect taxes on non-residents’ income. These include interest payments, rent payments, royalties, and business management fees. Non-resident employees and professionals are also required to pay withholding tax. Withholding tax rates vary depending on the services.
Customs and Excise Duty
Essentially a duty-free port Singapore does not tax exports and import duty is levied only on petroleum products, cigarettes, motor vehicles, and alcohol.
All property owners in Singapore are required to pay annual property tax. This is levied on a progressive scale based on the annual value of the real estate. The annual value is calculated by estimating the gross income of the property if it were rented out. As a whole, Singapore property tax rates are perceived to be very low. This is especially the case for owner-occupied property.
No taxes on dividends, capital gains, or inheritance
The single-tier tax system of Singapore does not charge taxes on dividends. There is also no capital gains or inheritance taxes.
Territorial tax system
This taxes companies based on where the profits are located rather than corporate residence. In essence, this means Singapore companies that earn profits overseas do not face additional Singapore taxes on those profits.
This article does not constitute legal advice.
The opinions expressed in the column above represent the author’s own.