Key Tax Concessions You May Be Missing Out On As An Expat

March 8, 2019
Boon Tan

Our Managing Director, Boon Tan, was recently featured in the Orient magazine (a publication produced by the British Chamber of Commerce in Singapore) discussing the key tax concessions available to Expats in Singapore.

Read the full article.

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3 key tax concessions you may be missing out on as an expat

February 27, 2019
Boon Tan

With the presentation of the 2019 Budget by Treasurer Heng, now is the time to start planning for the preparation of your personal tax return. With that in mind, this article outlines points for expats to consider when it comes time for preparation of your Singaporean income tax return.

The good news is that your Singapore tax return is not going to be hard to do. For many, the process takes 5 minutes and is done online.

Your return is due for lodgement each year by 15th of April. As there is no withholding tax, you will be required to make a payment of your tax liability upon receipt of your Notice of Assessment from Inland Revenue Authority of Singapore (“IRAS”). Alternatively, IRAS does provided for you to pay your tax liability in monthly instalments (interest free) via direct debits from your Singaporean bank account.

Why is tax so simple in Singapore?

The key to the simplicity is the nature of the Singaporean tax system which is a territorial based system.

Singapore only levies tax on income sourced here.

The term “sourced” means income that is generated in Singapore – e.g., employment income, interest paid by a local bank. Foreign income, such as rental income from your principal residence or investment property in your home country, is not taxed in Singapore – even if you bring the funds to Singapore.

Other income generated from interest, dividends, and capital gains on the disposal of assets anywhere in the world is all exempt from tax in Singapore. Besides, there are limited deductions that one can claim as an individual.

Notwithstanding this, here are some of the key concessions that you may be eligible to claim.

Not Ordinary Resident (“NOR”) Scheme and your tax residency

A key concession for expats to consider claiming as an employee based in Singapore is the NOR Scheme.

The NOR Scheme was introduced as an incentive to global firms to use Singapore as a regional base, and to bring talented individuals to the country. Under the NOR Scheme, you can pro-rata your taxable income based on the number of days you have worked outside of Singapore during the year – meaning that your effective tax rate can be reduced to a rate as low as 10%.

You can apply the NOR Scheme to reduce your tax rate by exempting part of your income, which in turn, will reduce the marginal tax bracket you fall into. Note that this is a concession under Singaporean taxation and does not mean that the untaxed income in Singapore is therefore taxable in the country you worked.

To qualify for the NOR Scheme, you must meet all the following criteria:

  1. Your taxable income in Singapore must be at least $160,000;
  2. Travelled for work for at least 90 days during the year;
  3. You are a tax resident of Singapore in the year you are claiming the concession; and
  4. Must not have been a tax resident of Singapore for the three years prior to the year in which you are applying the NOR Scheme.

You can claim NOR for the first five years that you are a tax resident of Singapore. If you do not qualify for the Scheme for one year during this period because you did not travel at least 90 days, you will lose one year of eligibility.

To apply for the NOR Scheme, you must lodge a claim each year at the time you file your tax return. Your claim must list the number of days and where you have worked outside of Singapore and must be certified by your employer as being correct.

In years that you qualify but fail to make a claim for the NOR Scheme when you lodge your return, you cannot go back and amend the return to claim the concession.

In the 2019 Budget, it was announced that the NOR Scheme would be stopped as of 31 December 2019. Therefore, the last claims to enter the NOR Scheme will be due with the lodgement of the YA2020 income tax return. Individuals who are already in the midst of their 5-year NOR eligibility period can continue to make the claim post the end of this year.

Tax reliefs

Singapore’s tax system provides tax residents with tax reliefs which reduce your taxable income. You can claim and apply as many reliefs that you are eligible for each year.

Five common tax reliefs that can be applied when preparing your tax return include:

  1. Spouse relief
    If you are supporting a spouse who is not working and/or earning less than $4,000 from worldwide sources, you can claim a relief of $2,000.
  2. Child relief
    You are entitled to claim relief for supporting a child equal to $4,000 per child regardless of where they live. Each child must be aged less than 16, or if over the age of 16 they must be in fulltime education (not necessarily here in Singapore) and cannot have an annual income of more than $4,000 from worldwide sources. The system recognises stepchildren and adopted children as qualifying for this relief.
  3. Life insurance premiums
    You can apply a tax relief of up to $5,000 for the payment of life insurance premiums if your insurance provider has a branch or presence in Singapore. You may, therefore, be able to claim this relief for premiums paid in your home country.
  4. Foreign maid levy relief
    If you are a woman working in Singapore and employ a maid which requires you to pay the foreign maid levy, you will be able to claim a relief equal to twice the levy amount paid for one domestic helper.
  5. Professional course relief
    Up to $5,500 relief is granted if you enrol into a course, seminar or conference that leads to an approved academic, professional or vocation qualification. The relief is calculated based on the amount spent on fees, tuition, aptitude tests and registration fees incurred.

Donations

If you have made donations during the year to a local cause, you are able to claim a deduction of 2.5 times the amount you donated. To be able to make a claim, donations must be made in cash to the Government or any institution of public character which allows for their donations to be claimed at the 2.5 times rate.

Claiming everything you are entitled to

While the Singaporean tax system is a lot simpler than others around the world, you should speak with a qualified advisor ahead of lodging your personal return and ensure that you claim all the concessions you are entitled to.

About the author

Boon Tan is an experienced Accountant and has been working in the international tax advisory sector for over ten years. Born in Australia with Singaporean roots, Boon relocated to Singapore at the end of 2015.

As an expat living in Singapore, he has first-hand knowledge and experience of what expat families go through to establish themselves in a new city. He regularly draws on his in-depth understanding of the local Singaporean tax system and a network of in-country specialists in expat hot-spots around the world including USA, UK, Asia Pacific, and Australia to provide bespoke tax advice to clients.

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More articles by Boon

 

Key Tax Concessions You May Be Missing Out On As An Expat


8th Mar 2019
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Our Managing Director, Boon Tan, was recently featured in the Orient magazine (a publication produced by the British Chamber of Commerce in Singapore) discussing the key tax concessions available to...

 

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Our Managing Director, Boon Tan, was recently featured in the Orient magazine (a publication produced by the British Chamber of Commerce in...

 

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What are the tax consequences of arriving in Singapore and becoming tax resident Resident individuals are subject to tax on income accruing in or...

FAQ

May 21, 2017
Boon Tan

What are the tax consequences of arriving in Singapore and becoming tax resident?

Resident individuals are subject to tax on income accruing in or derived from Singapore or received in Singapore from outside of Singapore.
However, overseas income received in Singapore on or after 1 January 2004 is generally not taxable.

Taxpayers are assessed on a calendar year and tax is computed on a preceding year basis. Taxpayers must file a tax return by 15 April in the following year.

In addition, expatriate individuals can opt for the Not Ordinarily Resident scheme if he spends at least 90 days outside of Singapore for business reasons in respect of his Singapore employment and his total Singapore employment income is at least SGD160,000.

What is the minimum time I can remain in Singapore without being tax resident?

182 days.

Does Singapore tax its residents on a world wide or territorial basis?

Income tax is imposed on the basis of territoriality.

Is foreign income taxable in Singapore e.g. foreign rental income, foreign interest income and foreign dividend income?

All foreign income received by individuals in Singapore is exempt from tax where the tax authority is satisfied that the exemption will be beneficial to them, unless received through a partnership. Foreign dividends, branch profits and service fees received through a partnership may be exempt subject to conditions.

Does Singapore tax on a remittance basis?

No.

Does Singapore have a sales tax or VAT tax on purchases?

Singapore impose a Good and Services Tax of 7%.

Does Singapore have a capital gains tax that taxes me when I sell foreign assets?

There is no tax on capital gains. However, gains from the realization of capital assets can be included in ordinary business income and subjected to income tax if the sales were carried out in the course of a trade carried on by the taxpayer.

Does Singapore have an estate tax or death tax?

No.

What is the top tax rate in Singapore?

Individuals are tax at progressive rates and the top tax rate is 20% for income over SGD320,000.

Does the tax rate vary for different types of income and if so what are the rates?

Royalties received in connection with literary, dramatic, musical or artistic work or from a local or branch of a foreign publisher are taxed at a concessionary rate of 10% of the gross amount.

What are the common tax deductions available in Singapore?

  • Self, Spouse and Child reliefs;
  • Life Insurance premiums and pension funds contributions

Does Singapore require joint tax returns to be filed for me and my spouse or are separate tax returns required?

Separate tax returns are required.

If I have a foreign company or foreign trust before I arrived in Singapore is the income of that company or trust taxable?

No.

Do children under 18 pay a higher rate of tax on certain types of income?

No.

Is there a gift tax in Singapore?

No.

What are the personal tax exemptions in Singapore e.g. a gift from an overseas relative or a foreign insurance payout?

None.

When I leave the country is a ‘termination payment’ taxed by Singapore before I leave?

Termination payments which are compensation attributable to the loss of employment such as redundancy are not taxable.

If I receive shares as part of my salary is this taxed in Singapore?

Yes. Share options granted by virtue of an employment are a taxable benefit and the gains accrue as income in the year in which the option is exercised. The taxable value is the open market value at the time of the exercise less the amount paid for the share option.

What are other tax consequences of leaving the country?

An individual who leaves Singapore permanently is deemed to have derived a gain from the unexercised or restricted stock option plan, unless his employer is granted approval to keep track of the options. If the subsequent actual gain is less than the taxable gain, the taxpayer can apply for a reassessment of his tax liability.

The employer of an expatriate is required to notify the tax authorities and withhold the salary for the purposes of tax clearance should the expatriate cease employment in Singapore, or leave Singapore for a period of more than 3 months.

Are there any tax consequences of me transferring money from Singapore to my say home country?

None.

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us
By providing us your information you agree to our privacy policy

More articles by Boon

 

Key Tax Concessions You May Be Missing Out On As An Expat


8th Mar 2019
Boon Tan

Our Managing Director, Boon Tan, was recently featured in the Orient magazine (a publication produced by the British Chamber of Commerce in Singapore) discussing the key tax concessions available to...

 

3 key tax concessions you may be missing out on as an expat


27th Feb 2019
Boon Tan

With the presentation of the 2019 Budget by Treasurer Heng, now is the time to start planning for the preparation of your personal tax return With that in mind, this article outlines points for...

 

Singapore Budget 2019 – an expat perspective


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Treasure Heng delivered the 2019 Singapore Budget on the afternoon of 18 February 2019 This Budget was the first Mr Heng delivered as the anointed leader of the Fourth Generation of Government...

 

Key Tax Concessions You May Be Missing Out On As An Expat


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More articles by Boon

 

Key Tax Concessions You May Be Missing Out On As An Expat


8th Mar 2019
Boon Tan

Our Managing Director, Boon Tan, was recently featured in the Orient magazine (a publication produced by the British Chamber of Commerce in Singapore) discussing the key tax concessions available to...

 

3 key tax concessions you may be missing out on as an expat


27th Feb 2019
Boon Tan

With the presentation of the 2019 Budget by Treasurer Heng, now is the time to start planning for the preparation of your personal tax return With that in mind, this article outlines points for...

 

Singapore Budget 2019 – an expat perspective


26th Feb 2019
Boon Tan

Treasure Heng delivered the 2019 Singapore Budget on the afternoon of 18 February 2019 This Budget was the first Mr Heng delivered as the anointed leader of the Fourth Generation of Government...

 

Key Tax Concessions You May Be Missing Out On As An Expat


8th Mar 2019
Boon Tan

Our Managing Director, Boon Tan, was recently featured in the Orient magazine (a publication produced by the British Chamber of Commerce in...

 

3 key tax concessions you may be missing out on as an expat


27th Feb 2019
Boon Tan

With the presentation of the 2019 Budget by Treasurer Heng, now is the time to start planning for the preparation of your personal tax return With...

 

Singapore Budget 2019 – an expat perspective


26th Feb 2019
Boon Tan

Treasure Heng delivered the 2019 Singapore Budget on the afternoon of 18 February 2019 This Budget was the first Mr Heng delivered as the anointed...