Singapore Personal Income Tax: Important Details

The Personal Income Tax structure in Singapore is considered to be one of the best business-friendly and most efficient tax structures in the world. The tax year is based on the calendar year and starts from January 1 until December 31. The income tax is assessed and based on the preceding year.

There are important factors that one must remember when it comes to individual income tax:

* Income tax rates depend on the type of residency of an individual. The tax rate for a resident is different from a non-resident.
* A top marginal tax rate of 20% is charged upon a residents taxable income of S$ 320,000.
* For non-residents, either a flat tax rate of 15% is charged or the resident rates, whichever is higher.
* In general, all remuneration or payment coming out as a result of employment in Singapore for work performed is taxable, regardless of whether the funds came from inside or outside of Singapore.
* Other than salaries and bonuses, allowances such as housing and stock options are considered part of your taxable employment income.
* The rates for personal income tax in Singapore are progressive in structure, and depend on the amount of income by the individual.

TAX RESIDENT. Singapore residents are taxed differently from a non-resident. But first, we must define what a tax resident means. A tax resident may either be one of the following: a Singaporean; or a Singapore Permanent Resident (SPR) who has established a permanent residence in Singapore; or a foreigner who has stayed/worked in Singapore for 183 days or more in previous year. This however does not include a director of a company.

FOREIGNERS WORKING IN SINGAPORE. The following conditions are applicable for the taxability of income of foreigners working in Singapore:

* A foreigner who has worked in Singapore for at least 60 days will be exempt from income tax on his earnings earned in the country.
* A foreigner who has stayed or worked in Singapore for 61 to 182 days is charged a tax rate of 15% based on his income or resident rates, whichever is higher.
* A foreigner who has stayed or worked in Singapore for more than 182 days shall be taxed on his income based on the rates of a resident individual.
* The tax rates for residents shall likewise be applied to income of foreigners who have stayed in the country for a continuous period of at least 183 days after 2 years, and for those who have stayed for three consecutive years.

CHARGEABLE INCOME. Chargeable income is also known as TAXABLE INCOME. It is the income left after deduction of expenses, donations and other personal expenses. A personal tax relief can be availed of for expenses which result from support of dependents, academic tuition, professional development expense and premiums paid on life insurance policies.

TAX TREATMENT OF INCOME EARNED OVERSEAS. As a general rule, income from overseas received in Singapore is not taxable. However, there are certain circumstances under which overseas income is taxable:

* When the income is received in Singapore through partnerships in Singapore.
* When your overseas employment is incidental to your Singapore employment. This means your travel overseas is necessary for your job in Singapore.
* When you are working overseas in behalf of the Singapore Government.

WHO MUST FILE PERSONAL TAX RETURN? The following persons are required to file personal tax return:

* If you are a resident, or a holder of an employment pass, PEP or Entrepass;
* If your annual income in Singapore is above S$22,000 in 2010;
* If you have received a letter from Inland Revenue Authority of Singapore inviting you to file personal income tax.

PERSONAL TAX FILING DUE DATE. The Annual Tax Form must be filed on or before April 15 on income received on the preceding year ending in December 31. There is a surcharge rate for a return filed later than April 15.