TAXATION
IN SINGAPORE
Joanna Yap
16 September 2010
TAXES PAYABLE IN
SINGAPORE
1. Income Tax
5. Casino Tax
2. Goods and Services
Tax
3. Property Tax
6. Betting and
Sweepstake Duties
7. Private Lottery
Duties
9. Customs and Excise
Duties
4. Stamp Duties
5. Estate Duties*
* For deaths occurring before or on 15 February 2008.
INCOME TAX
TAX JURISDICTION
 Singapore essentially adopts a “territorial” tax
system.
 Generally, income is taxable in Singapore if it
is:a. accrued in or derived from Singapore; or
b. received in Singapore from outside
Singapore
and falls in one of the heads of charge.
HEADS OF CHARGE
 Gains or profits from any trade, business,
profession or vocation
 Employment income (including stock
options, accommodation allowance and car)
 Dividends, interests or discount;
 Pension, charge or annuity
 Rent royalties, premiums and any other
profits arising from property
 Any gain or profits of an income nature
YEAR OF ASSESSMENT
 Singapore adopts a preceding year basis
of assessment.
 Tax for any given year of assessment is
paid on the income earned:
– for individuals: in the preceding calendar
– for companies: in the financial year ending in
the year preceding that year of assessment
TAXATION OF
INDIVIDUALS
OVERVIEW
 Different tax rates and tax treatment apply
to tax resident and non-tax resident.
 Who are tax residents ?
– Singapore citizens
– Permanent
residents
who
established
Singapore to be their permanent home
– Foreigners who stayed or worked in
Singapore for more than 183 days in the
calendar year
TAX TREATMENT
Tax Resident Non- Tax Resident
1. Expenses*
Yes
Yes
2. Donations**
Yes
Yes
3. Personal Reliefs
Yes
No
4. Tax treaty between
Singapore and
another country
Yes
No
Expenses must be wholly and exclusive incurred in the production of income and not
specifically prohibited.
** Donations must be a approved charity or a registered grant-making philanthropic
organisation.
*
TAX RATES
 Tax residents
– Taxed at a progressive tax rate
– First $20,000 at 0% and subsequent amounts
at marginal tax rate ranging from 3.5% to 20%
with effect from YA 2010
 Non-Tax residents
– Employees : 15%
– Director’s fees, consultation fees and all other
income: 20%
TAX FILING AND TAX
PAYMENT
 2 modes of tax filing are available:– E-Filing (Deadline: 18 April of every year)
– Paper Tax Return (Deadline: 15 April of every
year)
 Payment
– Tax (estimate) must be paid within 30 days of
the tax bill even if an objection is lodged.
– If no objection is lodged within 30 days of the
tax bill, the tax bill is deemed final and
conclusive.
TAXATION OF
CORPORATIONS
OPTIONS AVAILABLE
FOR FOREIGN
COMPANIES
Foreign companies can carry out business
in Singapore in one of the following forms:



Representative Office;
Permanent Establishment;
Subsidiary company; or
Branch.
REPRESENTATIVE
OFFICE
Representative office is:(a)
not allowed to engage in commercial
activities or provide any services for a
fee; and
(b)
generally not regarded as a taxable
entity for tax purposes.
PERMANENT
ESTABLISHMENT
 Singapore follows the OECD model tax
convention - Generally, a foreign company would
be liable to tax in Singapore if it has a
permanent establishment in Singapore and the
permanent establishment has income accrued
or derived from Singapore or any foreign income
received in Singapore.
 In Singapore, permanent establishment is
defined as a fixed place where a business is
wholly or partially carried on.
PERMANENT
ESTABLISHMENT
 Permanent establishment includes:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
a place of management;
a branch;
an office;
a factory;
a warehouse;
a workshop;
a farm or plantation;
a mine, oil well, quarry or other place of extraction of
natural resources; and
(i) a building or work site or a construction, installation
or assembly project.
PERMANENT
ESTABLISHMENT
 A person is deemed to have a permanent
establishment in Singapore if that person:
-
carries on supervisory activities in
connection with a building or work site
or a construction,
installation
or
assembly project; or
-
has another person acting on his behalf
in Singapore who-
PERMANENT
ESTABLISHMENT
(i) has and habitually exercises an authority
to conclude contracts;
(ii) maintains a stock of goods or
merchandise for the purpose of delivery
on his behalf; or
(iii) habitually secures orders wholly or almost
wholly for him or for such other enterprise
as are controlled by him.
BRANCH AND
SUBSIDIARY
 Companies (whether foreign or local) are
taxed at a flat rate of 17% on their
chargeable income with effect from 2009.
 Who are tax residents ?
– Companies whose control and management
is exercised in Singapore.
 Like individuals, different tax treatment
apply to tax resident companies and nontax resident companies.
TAX TREATMENT
Tax Resident
Non- Tax Resident
1. Expenses*
Yes
Yes
2. Donations**
Yes
Yes
3. Capital allowance
Yes
Yes
4. Tax treaty between
Singapore and
another country
Yes
No
Expenses must be wholly and exclusive incurred in the production of income and not
specifically prohibited.
** Donations must be a approved charity or a registered grant-making philanthropic
organisation.
*
CAPITAL ALLOWANCES
 Capital allowance is granted in place of
depreciation.
 To claim for capital allowance:- capital expenditure was incurred on the
provision of plant and machinery; and
- the plant and machinery is used for the
claimant’s trade, business or profession.
WITHOLDING TAX
 Generally, the payer is obliged to withhold
tax where he is liable to pay the following
types of income to another person not
known to him to be resident in Singapore:
- interest;
- royalties and know-how payments;
- fees for technical assistance or
services; and
- management fees.
WITHHOLDING
TAX RATE
 Depending on the nature of the payment,
the withholding tax rate applicable to a
payment made to a non-resident could be
10%, 15%, 17% or the rate specified
under a tax treaty.
GOODS AND
SERVICES TAX
OVERVIEW
 Goods and Services Tax (“GST”):
-
was first introduced on 1 April 1994
-
is similar to value added tax in other
countries
-is essentially a consumption tax that is
levied on the supply of goods and
services in Singapore and the import of
goods
SCOPE OF GST
 GST is chargeable on any supply of goods
or services made in Singapore if:
-
it is a taxable supply;
the taxable supply was made by a
taxable person; and
the taxable supply was made in the
course or furtherance of a business
carried on by the taxable person.
IMPORT OF SERVICES
 Generally, the importation of services in
Singapore is subject to GST.
 A person who belongs in Singapore has to
account for GST if a person who belongs
outside Singapore supplies a service to
him.
EXPORT OF SERVICES
• Where a person supplies an international
service to a person who belong outside
Singapore, such service is zero-rated.
• International services broadly includes,
inter alia,:
-
services connected to international transportation;
services connected with offshore goods;
services supplied to persons and business abroad;
and
international telecommunication services.
PROPERTY TAX
OVERVIEW
 A tax on immovable properties including
all houses, land, buildings and tenements
but excluding inter alia, chattels and
industrial plant and machinery used for
the manufacture of goods.
PROPERTY TAX RATES
 Current Tax Rate:
- 4% per annum of one owner-occupied
residential property’s annual value
- 10% per annum of a property’s annual
value
ANNUAL VALUE
 Annual value:
-
For wharf, pier, jetty or landing-stage: the gross
amount at which the property can reasonably be
expected to be let from year to year, the tenant
paying the expenses of repair, insurance,
maintenance or upkeep.
-
For all other cases: the annual value is the gross
amount at which the property can reasonably be
expected to be let from year to year, the landlord
paying the expenses of repair, insurance,
maintenance or upkeep and all taxes (other than
GST)
STAMP DUTIES
OVERVIEW
 A tax imposed on certain legal and
commercial instruments.
 The main categories of instruments
currently liable to tax are sale or any
disposal (including gifts) of immoveable
property and shares, and in the case of
immoveable property only, lease or
tenancy and mortgage.
OVERVIEW
 All instruments executed in Singapore
should be stamped before execution
under section 42, but for administrative
convenience, all instruments are allowed
to be stamped within 14 days of execution
if executed in Singapore, and within 30
days of receipt in Singapore if executed
outside Singapore.
STAMP DUTIES RATE
 The rates of duties on the various types of
instruments range from a fixed amount of
$10 on an instrument of partition to ad
valorem rates depending on the amount
or value of the consideration paid in a
sale and purchase agreement.
CUSTOMS AND
EXCISE DUTIES
OVERVIEW
 Goods imported into or manufactured in
Singapore are subjected to custom and/or
excise duties.
 Four broad categories of dutiable goods in
Singapore:
(a) intoxicating liquors;
(b) tobacco products;
(c) motor vehicles; and
(d) petroleum products.
MORE INFORMATION
Custom Duties
 http://www.customs.gov.sg
All Other Taxes
 http://www.iras.gov.sg
 http://www.singaporelaw.sg/content/Taxation.ht
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