Singapore follows a “current year basis” for taxation, meaning that individuals taxes to pay for a particular year is assessed in the following year. In this guide, we will help you to understand and calculate your taxes and exactly how the income earned in the calendar year 2023 will be taxed next year.
Tax Residency for individuals in Singapore
Tax Residency for Individuals in Singapore
It is important to understand that taxation in Singapore is contingent upon an individual’s residency status as defined by the Inland Revenue Authority of Singapore (IRAS). An individual is deemed a tax resident for a specific Year of Assessment (YA) under the following circumstances:
- If they are a Singapore Citizen or Singapore Permanent Resident residing in Singapore, except for temporary absences; or
- If they are a Foreigner who has been in Singapore:
- For a minimum of 183 days in the preceding calendar year; or
- Continuously for three consecutive years, even if the duration of stay in Singapore is less than 183 days in the initial and/or third year; or
- If they are a Foreigner who has been employed in Singapore for a continuous period spanning two calendar years, with a total stay of at least 183 days (including the period preceding and following the employment). This pertains to employees entering Singapore, excluding directors, public entertainers, or professionals.
If you meet these criteria, you will qualify as tax resident, which means that all income acquired within Singapore is subject to taxation.
Foreign-sourced income for Singapore residents
At the same time, Foreign-sourced income, barring that received through partnerships within Singapore, remains tax-exempt upon its entry into the country. Opportunities for tax optimization arise through deductions applicable to expenses, donations, and personal reliefs. Further details on deduction strategies are available to enhance tax efficiency.
The income of tax residents undergoes taxation at progressive rates, ranging from 0% to 22%, post the deduction of allowable expenses, donations, and personal reliefs.”
However, failure to meet the aforementioned conditions designates an individual as a non-resident for tax purposes in Singapore.
Breakdown of the Taxable Incomes in Singapore
Now that we have covered the distinctions between resident and non-resident individuals, let’s dive deeper into what constitutes taxable income for individual residents in Singapore:
- Employment Income: This is the bread and butter. Any income you earn from your employment, including salaries, wages, bonuses, allowances, and benefits-in-kind, is considered taxable. It’s the core of your taxable income.
- Gains from Stock Options: If you’re a stock maven and benefit from stock options or stock awards from your employer, the gains from these are also included in your taxable income, subject to certain conditions.
- Rental Income: If you’re a landlord, the rental income you receive from leasing out your property is taxable. However, you can deduct certain expenses related to the property, such as property tax and maintenance costs.
- Taxable Benefits: Certain perks and benefits provided by your employer may be considered taxable. These can include things like housing allowances, car benefits, and more.
- Director’s Fees: If you’re a director of a company and receive fees for your services, these fees are also part of your taxable income.
Not all that is received by an individual is taxable. Certain items, like gifts, inheritances, and winnings from betting or lottery, are typically exempt from income tax. To calculate your Singapore taxes thus require an understanding of all your revenues.
Focusing on Taxes payable on Bonuses (as part of your income as an employee in Singapore)
In the realm of taxation, the compensation you receive, commonly known as salary, is subject to taxation. This encompasses remuneration, whether in cash or other forms, received for the services rendered as an employee to an employer. Bonuses also fall within the tax ambit. Bonuses, whether contractual or non-contractual, carry tax implications.
A. Contractual Bonus
A contractual bonus aligns with the terms stipulated in a service contract and holds legal weight, impervious to withdrawal by the employer without legal repercussions. Examples include the 13th-month payment or annual wage supplement, and bonuses dispensed under schemes such as a ‘deferred bonus plan’ or ‘retention bonus plan’. The entitlement to a contractual bonus arises in the specified year outlined in the contract or bonus plan, typically corresponding to the year of service.
- Example 1: Taxable Contractual Bonus
If an employer’s obligation to disburse a bonus is dependent on future conditions, entitlement arises only upon meeting these conditions.
- Example 2: Conditions Contingent Contractual Bonus
Should such bonuses be disbursed before condition fulfilment, taxation occurs at the payment of the bonus. If conditions remain unmet and the employee returns the bonus, the refunded amount is treated as an income adjustment in the year of refund.
- Example 3: Advance Payment with Future Conditions
Discretionary bonuses transmuting into legally binding agreements are taxable when the employer commits contractually to disburse them, and employees gain entitlement.
B. Non-contractual Bonus
Conversely, a non-contractual bonus is subject to withdrawal or cancellation by the employer before actual payment without legal ramifications. Taxation is contingent upon the bonus payment date.
After reviewing the taxation on your salary and bonuses in Singapore comes the question of taxes to pay for individuals in Singapore.
How much Taxes do you have to Pay in Singapore?
Singapore follows a progressive tax rate, which means that the more chargeable income is declared the more taxes are payable to the local tax authority. The framework has been amended in 2022 to reflect the new salary landscape in Singapore. You calculate your Singapore taxes with the table below:
| Chargeable Income | Income Tax Rate (%) | Gross Tax Payable (SGD) |
|---|---|---|
| First SGD 20,000 | 0 | 0 |
| Next SGD 10,000 | 2 | 200 |
| First SGD 30,000 | – | 200 |
| Next SGD 10,000 | 3.50 | 350 |
| First SGD 40,000 | – | 550 |
| Next SGD 40,000 | 7 | 2,800 |
| First SGD 80,000 | – | 3,350 |
| Next SGD 40,000 | 11.5 | 4,600 |
| First SGD 120,000 | – | 7,950 |
| Next SGD 40,000 | 15 | 6,000 |
| First SGD 160,000 | – | 13,950 |
| Next SGD 40,000 | 18 | 7,200 |
| First SGD 200,000 | – | 21,150 |
| Next SGD 40,000 | 19 | 7,600 |
| First SGD 240,000 | – | 28,750 |
| Next SGD 40,000 | 19.5 | 7,800 |
| First SGD 280,000 | – | 36,550 |
| Next SGD 40,000 | 20 | 8,000 |
| First SGD 320,000 | – | 44,550 |
| Next SGD 180,000 | 22 | 39,600 |
| First SGD 500,000 | – | 84,150 |
| Next SGD 500,000 | 23 | 115,000 |
| First SGD 1,000,000 | – | 199,150 |
| Beyond SGD 1,000,000 | 24 |
Calculate your Singapore Taxes based on your Taxable Income (2024)
Singapore 2024 Tax Calculator
This calculator is for your information only and does not include additional tax reliefs and other taxable incomes.
When and How to Pay Individual Taxes?
Taxation in Singapore adheres to the calendar year as the taxable period. Income earned in the preceding calendar year undergoes assessment in the subsequent calendar year, constituting the year of assessment.
Taxpayers are obliged to submit an annual income return, inclusive of necessary particulars for determining personal reliefs and deductions. This submission follows the calendar year and is due by the 15th of April, with an extension to the 18th of April for electronic filings.
The assessed tax is due for payment within one month from the assessment date, irrespective of whether a notice of objection has been filed with the tax authorities. The window for objecting stands at 30 days from the notice of assessment date, beyond which the assessment attains finality.
Employees can opt, upon application, for a convenient monthly instalment payment plan with no interest, facilitated through the Interbank GIRO system—an interbank fund transfer mechanism endorsed by the tax authorities.
Individual Taxes for non-resident in Singapore
Non-resident tax obligations in Singapore encompass distinct rates depending on the nature of income. For employment income, non-residents face taxation at a flat rate of 15% or the prevailing progressive resident tax rates—whichever results in higher tax liability (refer to the table above).
As for director's fees, consultation fees, and miscellaneous income, a consistent tax rate of 22% applies to non-resident individuals. This rate encompasses a spectrum of earnings, ranging from rental income to pensions and director's fees. It excludes employment income and specific categories subject to reduced withholding rates (refer to the section on Withholding taxes on income of non-resident individuals below).
Beginning from the Year of Assessment 2024, there is a slated adjustment in the income tax rate for non-resident individuals (excluding employment income and select categories with reduced withholding rates), seeing an increment from 22% to 24%. This measure aims to uphold congruence with the top marginal income tax rate applicable to resident individuals, maintaining a balanced fiscal landscape.
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