Understanding Singapore Income Tax In 5 Minutes!
Posted on March 17, 2015 by Anna V. Haotanto in Taxes // 6 Comments
There are some words we dread as adults, and the term income tax brings about as much joy as finding out that your favourite watering hole is no longer doing happy hour.
The income tax in Singapore is divided into two categories; personal income tax and corporate income tax. Personal or individual income tax is the tax from individual’s income. Corporate income tax is the tax levied on the profits that corporate entities make. Both types of income taxes comprise of income earned in Singapore, as well as that earned in foreign countries for individuals and corporate firms.
Singapore personal income tax is not only considered as the most competitive but is also the friendliest in the world. The Year of Assessment(YA) runs for a full calendar year, from 1st January to 31st December of every year. Year of Assessment refers to the year in which income is calculated and charged. This cycle is applicable for both corporate and individual income tax.
Tax Brackets (How Much To Pay)
- Personal Income TaxHow much taxes you pay depend on your your personal tax residency because taxes levied on residents are different from those levied on non-residents. An individual is considered a Singaporean tax residency if he or she is a citizen of Singapore. Otherwise, he must fulfil the following conditions;
- You have established your permanent home in the country and you have become a Singapore Permanent Resident (SPR)
- You are a foreigner who have stayed or worked in the country for at least 183 days or more
The highest earning bracket comprise of those individuals earning more than $320,000 with a resident tax rate of 20%. However, all non-residents levied at the rate of 15% or the resident rates whichever yields higher tax amount. Director’s fees and consultation fees is also taxed at 20%.
Singapore adopts a progressive personal tax rates. Progressive tax system levy taxes relative to a person’s amount of income. No tax is levied on those individuals earning below $20,000. Those who earns between 20,001 to 30,000 are levied at the rate of 2%, 30001 to 40000 are levied at the rate of 3.5%, 40,001 to 80,000 pay at a rate of 7%, 80,000 to 120,000 pay rates of 11.5%, 120,000 to 160,000 pay rates of 15%, 160,001 to 200,000 pay rates of 17%, 200,001 to 320,000 pay rates of 18%, and those earning 320,000 and over are levied the rate of 20%.