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Personal Taxation
In general, individuals are liable to Singapore income tax only on income accruing in or derived from Singapore.
Various categories of personal investment income from qualifying unit trusts, real estate investment trusts, bonds and bank deposits are exempt from tax.
Under the law, an individual’s business income is determined in the same way and subject to the same deductions as a corporation. However, it is usually more difficult for an individual to claim certain business deductions.
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Tax - A Matter of Moral or Rule of Law?
In the course of running a business, having to pay taxes is a testimony that one has done well in the business. That said, it has always been a taxpayer’s right to arrange its business within the framework of the law to minimize the tax burden. Some tax payers have taken this to a great distance and they have successfully created and implemented elaborate schemes with the use of entities in exotic jurisdictions or tax havens.
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Corporate Taxation
A corporation is generally liable for Singapore income tax on all income accruing in, or derived from Singapore, as well as foreign sourced income remitted or deemed remitted into the country.
Other Personal Taxation Information
See the topics about Removing of Section 40 Relief, Removing of Tax Concession on Home Leave Passages for Expatriate Employees and Introducing a Cap of $80,000 on Personal Income Tax Reliefs here.
Removing Transfers of Qualifying Deductions and Deficits Between Spouses
From YA 2016, married couples can no longer transfer qualifying deductions (i.e. unabsorbed trade losses, unabsorbed capital allowances and unutilised donations) and rental deficits between each other (including under the Loss Carry-Back scheme for unabsorbed trade losses and capital allowances).
Tax Rates
The total income of a resident individual is taxed on a sliding scale as follows:
Enhancing of Handicapped Dependant Reliefs
With effect from YA 2015, the amount of handicapped spouse, handicapped sibling and handicapped child reliefs will be increased as follows:
Enhancing of Parent and Handicapped Parent Reliefs
With effect from YA 2015, the quantum of parent and handicapped parent relief will be increased as shown in the table below.
Personal Deductions
A resident individual is entitled to various reliefs for earned income, spouse, children and dependent parents and siblings.
Not Ordinarily Resident (NOR) Scheme
Where an individual has not been a tax resident in Singapore for the 3 immediate preceding years, he/she may qualify for the Not Ordinarily Resident (NOR) status for 5 consecutive years from the year that they are a tax resident of Singapore.
Employment Income
Employment income is considered to be derived from Singapore if the duties are exercised here.
Tax Residency
An individual is a tax resident in Singapore if he/she is physically present or exercises employment in Singapore for 183 days or more during the calendar year preceding the YA. This rule is applied on a calendar year basis.