Income tax in

Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, bor ...

involves both individual income tax and

corporate income tax A corporate tax, also called corporation tax or company tax, is a direct tax imposed on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at the national level, and a similar tax may be imposed at ...

. Income earned both inside and outside the country for individuals and corporate entities is taxed

Individual income tax

Individual income tax in

is payable on an annual basis, it is currently based on the

progressive tax A progressive tax is a tax in which the tax rate increases as the taxable amount increases.Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), ''Concepts of Taxation'', Dryden Press: Fort Worth, TX The term ''progre ...

system (for local residents and tax residents), with taxes ranging from 0% to 22% since Year of Assessment 2017. The Year of Assessment (YA) is based on the calendar year commencing 1 January to 31 December, and is payable on a preceding year basis, whereby taxes payable per year of assessment is based on income earned in the preceding calendar year. Taxation is based on the source principle, in which only income earned at source, in this case in

, or those derived from overseas but received in

, are taxable. Any income arising from sources outside Singapore and received in Singapore on or after 1 January 2004 by an individual (other than partners of a partnership) is exempt from

tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...

. This system has the potential to allow for tax avoidance practiced by individuals who derive income from abroad, gain

tax exemption Tax exemption is the reduction or removal of a liability to make a compulsory payment that would otherwise be imposed by a ruling power upon persons, property, income, or transactions. Tax-exempt status may provide complete relief from taxes, redu ...

s via their non-resident status there, and use this income outside Singapore. Expatriates and foreign workers in Singapore are also liable for paying income tax.

Corporate income tax

Corporate income tax like individual income tax is payable on annual basis. However, foreign income earned by a Singapore company may require dual taxation once in the income origin country and in Singapore. In such a case, companies can claim Foreign Tax Credit (FTC) payable on the same income. As company is taxed only on preceding year, there is a need for business owners to truly understand the difference between "year of assessment" and "basis period". Foreign-sourced dividends, foreign branch profits and foreign-sourced service income remitted into Singapore on or after 1 June 2003 by a Singapore resident company will be tax exempt if: * the headline tax rate of the foreign country from which income is received is at least 15 percent in the year the income is received, and * the foreign income had been subjected to tax in the foreign country from which it was received.

References

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External links

Information on Individual Income TaxIncome Tax ActSingapore Personal Income Tax Rates
Taxation in Singapore