Singapore is well-known for its business-friendly environment, low tax rates, and efficient tax system.
Personal income tax is one of the key components of the Singapore tax system, and it is important for residents and non-residents to be aware of their tax obligations.
In this blog, we will provide an overview of the personal income tax in Singapore for the year 2023. It will help an individual determine their Singapore income tax liability by understanding their tax residency status, applicable tax rates, and tax exemptions.
Table of contents
Singapore Personal Income Tax for Residents
Singapore residents are taxed on their income earned in Singapore as well as overseas income that is remitted to Singapore.
The rates for tax residents are progressive, which means that a higher-income earner must pay tax pegged to higher rates.
Note that a foreigner who has stayed or worked in the Lion City for 183 days or more in a calendar year is considered a Singapore tax resident and will be subjected to resident rates.
The personal income tax rates for residents for YA 2023 are:
| Chargeable Income | Tax Rate (%) | Gross Tax Payable ($) |
|---|---|---|
| First $20,000 Next $10,000 |
0 2 |
0 200 |
| First $30,000 Next $10,000 |
– 3.5 |
200 350 |
| First $40,000 First $80,000 Next $40,000 |
– – 11.5 |
550 3,350 4,600 |
| First $120,000 Next $40,000 |
– 15 |
7,950 6,000 |
| First $160,000 Next $40,000 |
– 18 |
13,950 7,200 |
| First $200,000 Next $40,000 |
– 19 |
21,150 7,600 |
| First $240,000 Next $40,000 |
– 19.5 |
28,750 7,800 |
| First $280,000 Next $40,000 |
– 20 |
36,550 8,000 |
| First $320,000 Above $320,000 |
– 22 |
44,550 |
Singapore Personal Income Tax for Non-Residents
Non-residents are foreigners who have stayed or worked in Singapore for less than 183 days in a calendar year.
They are taxed only on their income earned in Singapore, and they are not eligible for tax reliefs and deductions. They are subject to tax at a flat rate of 15% or at progressive resident tax rates as per the table above, whichever results in a higher tax amount.
Note that the non-resident personal income tax rate for director’s fees, consultation fees, and other income is presently at 22%. This excludes employment income and certain income taxable at reduced withholding tax rates.
Tax Deductions and Exemptions in Singapore
Tax exemptions and deductions can help to lower residents’ tax liability. Residents are eligible for various tax exemptions and deductions, such as:
- Personal reliefs
- Deductions for employment expenses
- Contributions to approved charitable or social causes
Non-residents are not eligible for most of these exemptions and deductions.
There are also some groups of individuals who are exempted from personal income tax. These include:
- Individuals whose annual income is below the taxable income threshold:
- For the year of assessment (YA) 2022, the taxable income threshold is S$22,000. Individuals whose annual income is below this threshold are not required to pay personal income tax.
- Non-resident individuals whose employment is for a duration of not more than 60 days in a calendar year:
- Non-resident individuals who are in Singapore for employment for a short period of not more than 60 days in a calendar year are exempted from paying personal income tax on their employment income.
- Individuals who receive certain types of income that are exempted from tax:
- Some types of income are exempted from personal income tax in Singapore. These include certain types of:
- Government grants
- Scholarships and awards
- Certain gains from the disposal of investments
- Certain income earned by approved charitable or religious organisations
- Some types of income are exempted from personal income tax in Singapore. These include certain types of:
Even if an individual falls under one of these exempted categories, they may still be required to file a tax return in Singapore to report their income.
Additionally, other taxes such as Goods and Services Tax (GST) and tax levied on rental income may still be applicable.
Related Read: 14 Strategies to Reduce your Personal Income Tax »
Singapore, an Attractive Tax Haven
In conclusion, Singapore has a simple and efficient personal income tax system, which is attractive for residents and non-residents.
Residents are taxed on their income obtained in Singapore and overseas, while non-residents are taxed only on their income earned in Singapore.
The tax rates for residents are progressive, with higher-income earners paying a higher tax rate, while the tax rates for non-residents are flat.
It is important for individuals to understand their tax obligations and to comply with the Singapore tax laws. Therefore, it makes sense to engage the services of an experienced taxation team for personal income tax filing if you are unsure of the process!
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Frequently Asked Questions About Personal Income Tax in Singapore
- Your personal income tax is influenced by certain factors, including your:
- Tax residency
- Chargeable income
- Personal income tax rates
- Applicable tax exemptions
- These types of income are not taxed in Singapore:
- Capital gains tax
- Shipping income as specified under Section 13A and Section 13E of the Income Tax Act 1947
- Foreign-sourced dividends, service income, and branch profits obtained by a resident firm under Section 13(8)
- You can either file your income tax electronically or engage an income tax expert to help you do so and remove the hassle of doing it yourself.
InCorp can help you avoid last-minute stress and potential penalties. Stay compliant and let us file your taxes today.
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