Singapore has one of the most relaxed tax laws, and because of this, it is important to understand how much income tax to pay in Singapore and how the tax system works.
Loved by businesses and entrepreneurs around the world, Singapore enforces the ideas of free trade with very relaxed trade laws, business friendly government policies and minimal taxes.
Singapore is one of the most developed Southeast Asian countries and a massive business hub in the Asian region.
Known as one of the Asian tigers, Singapore has one of the largest foreign reserves and foreign direct investments in the world and is ranked 11th on the Human Development Index by the UN and 2nd in terms of the GDP Per Capita.
In this article, we will explain Singapore’s income tax system, who is expected to pay income tax, the types of income that are taxable or non-taxable, how much income tax to pay in Singapore, how to file income tax, and how SJH Advisory can assist you in tax-related matters.
Who Should Pay Personal Income Tax in Singapore?
Before getting to calculate how much income tax to pay in Singapore, you must first understand who is expected to pay income tax. Personal income tax in Singapore is the tax charged on the income earned by individuals in Singapore.
Taxes are usually charged based on the kind of status has in Singapore; there are two main categories of individuals, residents and non-residents.
Residents are people who are permanently based in Singapore. Foreigners who have spent more than 183 days at once are also classified as “residents” when filing taxes.
Non-residents are of two types, one consisting of people who have spent less than 60 days in Singapore, and the other of individuals that have spent more than 60 days but less than 183 days.
Anyone that earns income in Singapore would have to pay income tax, but non-residents who have stayed in Singapore for less than 60 days can avoid being taxed based on their type of occupation.
So, how does one know how much income tax to pay in Singapore? The tax rates in Singapore can be progressive and fixed, but most of the time, tax rates are progressive, meaning that the tax rates increase as the income increases.
Resident tax rates range from 0% to 22%; meanwhile, for non-residents that have spent more than 60 days but less than 183 days at a go in Singapore, the tax rate is usually fixed at 15%, but progressive tax rates can also apply.
Individuals who have an annual income of less than SGD20,000 don’t have to pay tax since the tax rate for income less than this amount is capped at 0%. However, if your annual income is SGD20,000 and above, you would have to file a tax return.
What Is Taxable and What Isn't?
The Singapore government categorizes income under taxable and non-taxable income, and this affects how much income tax to pay in Singapore. The difference between taxable income and non-taxable income is as follows:
- These include employment income, director’s fees, rental income, self-employment income, and salary bonuses.
- These include income earned from winning the lottery, capital gains from stocks and dividends, and pensions.
Calculating How Much Income Tax To Pay In Singapore
To be able to file a successful tax return, individuals must know the tax rate that their income falls under. The table below breaks down how much income tax to pay in Singapore according to the annual income earned:
|Annual Income||Income Tax Rate|
|Less than $20,000||0%|
|More than $20,000||2%|
|More than $30,000||3.5%|
|More than $40,000||7%|
|More than $80,000||11.5%|
|More than $120,000||15%|
|More than $160,000||18%|
|More than $200,000||19%|
|More than $240,000||19.5%|
|More than $280,000||20%|
|More than $320,000||22%|
How To File Your Income Tax in Singapore?
Now you can calculate how much income tax to pay in Singapore, but how exactly do you file your taxes? There are two methods in which tax can be filed in Singapore, online and paper filing (by mail).
Tax returns can begin to be filed in April, and the due date for mail filing of income tax is April 15th, while the due date for online tax filing is April 18th.
There are three types of forms that are available for tax returns in Singapore:
- Form B1 for tax resident individuals
- Form B for self-employed people
- Form M for non- residents
Based on which category you fall under; you can get this tax form online or physically by mail. After you receive this form, you would have to fill it out and submit it to IRAS.
You would have to put in your business registration number, details of earnings and income together with their source, tax rate, deduction claims such as child relief, medical allowances, insurance, donations, and so on.
After you have filled in all the relevant details and submitted them, whether by mail or online, you will get a tax bill detailing how much income tax to pay in Singapore.
The individual must pay the tax bill within 30 days of receiving the notice from IRAS. If you have any complaints regarding the bill you get, you can make a complaint to IRAS and wait for a response.
How Can We Help?
Tax filing and collection is a serious activity in Singapore for companies, self-employed people, and private individuals.
Serious penalties can be dealt by the Singapore government if there are inconsistencies in your tax records regarding how much income tax to pay in Singapore.
If you wish to have a perfect tax return filed with zero possibility of error or clarify how much income tax to pay in Singapore, contact SJH Advisory today.
SJH Advisory is a professional business consulting and tax accounting firm that has a wealth of experience in dealing with tax-related problems, and we would be eager to assist you with the help of our tax experts in the field.
Frequently Ask Quenstions
Singapore mainly operates on a progressive tax rate system to calculate how much income tax to pay in Singapore.
Residents, and people who have spent more than 60 days in Singapore at a go, have to pay income tax. This article covers exactly how much income tax to pay in Singapore, depending on which category you fall under.