In Singapore, the income tax can be classified into two categories, the personal income tax and the corporate tax. It is important to note that personal income taxes in this country are among the lowest in the world. The income tax needs to be paid annually and is based on the progressive tax system where the tax rate increases as the taxable base amount increases. Income which is earned at source is taxable which includes income which is derived from overseas but received in Singapore. Moreover, like the individual income tax, the corporate income tax too is paid annually.
When do you have to pay income tax
In Singapore, you will be considered a tax resident if you reside in the country and is a Singaporean. Additionally if you are a foreigner who has been staying in Singapore for more than 183 days in a tax year, you will be required by law to pay tax. It is mandatory to file tax return in Singapore if your annual income is above S$22,000. In other cases, if you have been informed by the Singapore tax department that you need to file tax returns, you will have to do so.
Calculating the chargeable income
The above formula is used to calculate the chargeable income; the amount which is subject to taxation. By total income we mean all profits which result from trade, all gains and profits from employment, the dividends and interests and profits which arise from properties. Expenses are deducted from total income to calculate the statutory income. Donation indicates the amount which is paid to charitable organizations. When the total donations are deducted from the statutory income, we receive the accessible income. When the amount received as relief is adjusted with the assessable income , we finally get the chargeable income amount which is subject to taxation. It needs mention that Singapore is one nation which does not charge either capital gains tax or estate tax.
Are you a non-resident?
In case you are a non-resident in Singapore, your employment income will be exempted from tax if you have been employed for a short-term which is 60 days or less. Once you are an eligible tax payer, it is mandatory for you to file your tax returns by the 15th of April. After you have decided to file the tax returns either by mail or online, it is important that you select the right form. Residents need to use form B1, in case you are self-employed, it is form B, and in case of non-residents, form M is appropriate. In case you are late in filing the taxes, penalties will be imposed on you.
Taxes on income earned overseas
The overseas income which you receive will be taxable if it is received through partnerships in Singapore. Additionally if you are employed in a company in Singapore and need to travel abroad for work, getting reimbursed in return, your income will be subject to taxation. Lastly, if you are working overseas on behalf of the Government of Singapore, you will have to pay taxes on the income earned overseas.