As you may have heard before, Singapore has one of the best tax rates in the world, in terms of business, individuals and investors. However, there’s still a tax system in place, meaning if you want to actually benefit from this country’s generous rates, you’re going to need to understand how it works. Here are some things to consider.
3 Types of Taxpayers
There are essentially three different kinds of taxpayers in this country. The category you fall into will, predictably, affect how much you owe the government. Most of you won’t fall into the first category if you’re reading this article for business reasons: that’s if you’re a Singaporean already. More than likely, you’re one of the other two types of taxpayers:
- Permanent Resident (also called an SPR: Singapore Permanent Resident): this is for the group of people who were not born in Singapore, but have established a permanent home there.
- Foreigner: if you’re from another country, but have stayed and/or worked in Singapore for over 183 days over the course of the last year, this is the tax category you fall into.
If you fall into one of these categories, you are expected to pay taxes to the Singaporean government on any income you’ve made while inside the country. However, any money you made from outside the country is in no way taxable by the government.
Tax Structure
Like most countries, Singapore works on a progressive tax structure, though theirs is fairly straightforward and far more user-friendly than most. Once you account for personal relief deductions, your personal income tax rate will fall somewhere between 0 and 20%. We’ll include a link at the end of this article to show you exactly what your rate is for the money you make.
Any non-resident who has only been working in the country for less than 60 days is completely exempt from having to pay taxes. The only exceptions are those who work as public entertainers, directors or practicing some other profession in Singapore.
Personal Reliefs
Again, like most countries, there are personal reliefs people can claim in Singapore in order to keep themselves free of certain tax burdens. In Singapore, common examples of these reliefs cover things like:
- Children
- Insurance Premiums
- Court Fees
- CPF (Central Provident Fund) Contributions
Double Taxation
A major problem many people face when they begin doing business in Singapore—or any foreign country—is double taxation. In short, this refers to getting taxed by Singapore and the country you’re from. One way to avoid this is by checking to see if your country has an agreement with Singapore to ensure you only pay once. Otherwise, any savings you’re realizing by doing business in Singapore could be quickly erased come tax time.
For more information about how much you’ll be expected to pay in Singapore, take a look at the specific Singapore Tax Rates we mentioned earlier. This will help give you a better idea about what it will be like to do business there.