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.

Singapore Taxes

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.

Tax Cycle (When To Pay)

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)

  1. 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%.

    From YA 2012 to YA 2016
    Chargeable Income Rate (%)Gross Tax Payable ($)
    First $20,000  0  0
    Next $10,000  2  200
    First $30,000  –  200
    Next $10,000  3.5  350
    First $40,000  –  550
    Next $40,000  7  2,800
    First $80,000  –  3,350
    Next $40,000  11.5  4,600
    First $120,000  –  7,950
    Next $40,000  15  6,000
    First $160,000  –  13,950
    Next $40,000  17  6,800
    First $200,000  –  20,750
    Next $120,000  18  21,600
    First $320,000  –  42,350
    Above $320,000  20

    These rates are before tax rebate of 30% for those below 60 years and 50% for those aged 60 years and above, up to a maximum of $1500.

  2. Corporate TaxFor the corporate tax rate, the standard rate is 17% with a partial tax exemption of the first SGD 300,000 of chargeable income such that 75% of the first SGD 10,000 of chargeable income is exempted from tax and the next SGD290,000 is also tax exempt.

Paying Singapore Taxes

The tax payer has two options of paying tax. First, you can pay the full amount within one month from the date of income tax or the date of receiving the income tax bill. Alternatively, you could register for a 12 month interest-free GIRO deduction plan that allows you to pay your income tax in instalments.

Filing Of Income Tax

The following must file their personal tax returns;

  • Those with annual income greater that S$22,000 by the year 2012
  • Resident/ Employment pass/Entrepass holders
  • Those who have received a letter from Inland Revenue Authority of Singapore requesting them to file their taxes irrespective of the amount of their annual income in the previous year

The employers are expected to submit duly completed Forms IR8A to employees, indicating remuneration and benefits in kind for the previous year, by 1st March.

The Singapore law makes it mandatory for people to file their personal tax returns to Inland Revenue Authority of Singapore by 15 April of every year. The Authority diligently enforces the requirements pertaining to the filling of individual tax. If you fail to file your tax returns by 15th April, IRAS will raise the estimated assessment and send you the income tax bill from May to August. Failure to comply with this requirement may result to court prosecution and fines.

Find out the 8 Terms You Need To Know Before Filing Taxes.

Period To Keep Paperwork 

The length of period to keep your papers depends on the expense, action, or events that the paper records. You should keep your documents that support a transaction of income or deductions on tax return until the time period of limitations for that returns expires.

Time of limitation in this case refers to the period in which you can change your tax return to claim a refund or the authority can impose additional tax. In general, you should keep your papers for at least five years after the due date of paying tax.

How To Keep Paperwork

For manual records you are required keep the in legible and in well-organised manner. You should make multiple photocopies and keep them just in case one fades over time. On the other hand, you can keep records electronically in computers or accounting software.

Avoid these 8 tax mistakes!

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).