Singapore Tax System- An Introduction to Taxes in Singapore

When we come of age and start to earn a living, own a house, or own a vehicle — all signs of ‘adulting’ — taxes undoubtedly come into the picture. One tax definition is a mandatory contribution made by individuals or corporations to better the public service of a particular country. The money generated is used to build roads, public transportation, and fund public schools. Essentially, that money is used so that all citizens can benefit.  Singapore tax system is governed by the Inland Revenue Authority of Singapore (IRAS). Established in 1960, it is responsible for all tax collections and plays a key role as a tax administrator for the Ministry of Finance, where it makes recommendations on policies to ensure they are business-friendly, to attract more investors and businesses. 

 

Singapore Tax System – Types of Taxes in Singapore

  • Income: Charged based on the income of individuals and companies that will be discussed further below.
  • Property: The property owner must pay based on the expected rental value of the property.
  • Motor vehicle: The owner must pay taxes aside from the import tax, such as the road tax renewal, to curb ownership and road congestion.
  • Customs and excise duties: As a free port, Singapore has relatively relaxed excise and import duties. Only a few items are subjected to these duties, such as motor vehicles, tobacco, liquor, and petroleum products.
  • Goods and services (GST): A fee imposed based on consumption of goods (e.g., buying a designer handbag) or services (e.g., visiting a hospital doctor)  
  • Betting taxes: Duties that are for a private lottery, betting, and sweepstakes.
  • Stamp duty: A charge imposed on commercial and legal documents relating to stock or shares and immovable property.

Corporate Income tax in Singapore

Singapore’s corporate tax has consistently decreased over time; from 26% in 1997 to 17% since 2010. If your company earns less than S$300,000, you will only need to pay a rate of 8.5%. Singapore Tax System adopts a single-tier income tax system, meaning that the corporate tax paid by the company is the final one; there are no dividend or capital gain taxes for shareholders to pay. Startups, defined as entities with their first three tax filings, will experience tax incentives, where the first S$100,000 income will be reduced by 75% from the normal rate. Meanwhile, the next S$100,000 income will be reduced by 50%, and the next tier of income will be charged using the usual rate. The due date for corporate tax filing for Singapore companies is 30 November (for hard copy forms) and 15 December (for e-filing).

Personal Income Tax

The Singapore Tax System income tax rate is progressive; the more you earn, the more you will pay. The rate starts at 0 (for the first S$20,000) and increases incrementally afterward until it reaches 22% for those who earn more than S$320,00. The full table can be seen below:

 Chargeable Income Rate (%) Gross Tax Payable ($)
On the first 20,000

On the next 10,000

0

2

0

200

On the first 30,000

On the next 10,000

3

.50

200

350

On the first 40,000 On the next 40,000

7

550

2,800

On the first 80,000 On the next 40,000

11.5

3,350

4,600

On the first 120,000 On the next 40,000

15

7,950

6,000

On the first 160,000 On the next 40,000

18

13,950

7,200

On the first 200,000 On the next 40,000

19

21,150

7,600

On the first 240,000 On the next 40,000

19.5

28,750

7,800

On the first 280,000 On the next 40,000

20

36,550

8,000

On the first 320,000 In excess of 320,000

22

44,550

 

Remember that personal income tax does not apply to inheritance or capital gains from stocks or Singaporeans who work overseas. The due date for individual tax filing is on 15 April each year. Taxes are an essential part of society. The revenue collected is used to help fund public works and services, to maintain and improve a country’s infrastructure and services. Ultimately, taxes are utilized for the betterment of the economy and those who are living in it. Want to get tax and accounting advice from an expert in Singapore or globally? Look no further; start it with Lanturn.

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