In short, the tax system
of Singapore depends on a lot of factors, both corporate and personal tax.
There are a lot of
factors, such as
- If the company or the individual
is earning in Singapore
- If the income of the company or
the individual is derived from Singapore
- If the income is received or will be received in Singapore
In such cases, you have
to pay tax to the government of Singapore, but if the source of your income
comes from outside of Singapore or isn’t received in Singapore, that amount
will not be eligible for tax.
You can always hire a
professional and experienced audit firm in Singapore, which will
help you to stay compliant with all the tax-related issues. But to provide you
with a bit of information, we are going to discuss about certain taxes, these
are
- Income tax (corporate and
personal)
- GST
- Real estate tax
- Vehicle tax
- Stamp duty etc
v Commercial or corporate income tax
Whether it is a foreign company
or a domestic enterprise, Singapore has implemented a static corporate or
commercial tax for all the entities. Each expense you make or the profit you
earn on the soil of Singapore is liable for income tax. Both, foreign and local
business entities have to pay tax from the income they have earned or received
in Singapore. You will find two types of companies in Singapore.
- Resident companies, which are
built by the PRs of Singapore
- Non-resident companies, which are
built by the foreign investors
So, the tax depends on
two factors, the company’s control in Singapore and the management. If the
company is controlled and managed by Singaporeans, then the company will be
regarded as a resident company, even if they haven’t gone through the
incorporation process.
Though it is hard to
differentiate the tax differences between the resident and non-resident
companies in Singapore, but still the resident companies can enjoy some favor
from the government, such as
- Resident companies have a DTA or
double taxation avoidance agreement with other countries that the
non-resident companies don’t have
- They will have immunity from the
profits of overseas branches and also the overseas service income
- If you have formed a new company,
you can enjoy tax relief for 3 years (T&C applied)
v Personal income tax
The personal income tax
rate in Singapore stays in between 0-22%, without any tax deductions. An
individual will be considered as a resident of Singapore if
- He/she holds an SPR
- Being a new resident for over 6
months, 183 days to be exact
- You lived in overseas too, but
have been working in Singapore for the last 3 years
If you are considered as
a resident of Singapore, you are eligible to pay income tax according to your
earning. Even if they are living overseas, but earning through a
Singapore-based company, they have to pay tax too. If you want to know more
about tax deductions, then you must consult a financial services audit firm in Singapore, but tax deductions can be made for child
care, vocational courses, insurance, and CPF endowment.
v GST
GST or the goods and
services tax is implemented if your company is importing goods from overseas.
But, immunity has been given on sales and leases property and several financial
services since July 1, 2007.
v Real estate tax
Real estate or property
tax has been imposed on all houses, buildings, and landowners of Singapore. If
you are a real property owner, you have to pay an annual tax on the month of
January every year. The property tax depends on the annual evaluation of your
property, so if the price goes up, your real estate tax will change according
to that.
