What is income tax in Singapore?
Income tax is a tax imposed by governments on the income earned by businesses and individuals within their jurisdiction. Taxpayers must file an annual income tax return to determine the amount of tax they owe.
Governments collect income taxes as a source of revenue. The funds generated from these taxes are utilised to support public services, fulfil government obligations, and provide goods for the benefit of citizens.
Who pays income tax in Singapore?
- Individuals who are Singapore residents
Income tax rates are determined based on an individual’s tax residency status. To be considered a tax resident for a specific Year of Assessment (YA) in Singapore, you must meet one of the following criteria:
- If you are a Singapore Citizen or Singapore Permanent Resident, you will be treated as a tax resident if you reside in Singapore, with the exception of temporary absences.
- If you are a foreigner, you will be considered a tax resident if:
a. You have stayed or worked in Singapore for at least 183 days in the previous calendar year.
b. You have worked in Singapore continuously for 3 consecutive years, regardless of whether your stay in Singapore was less than 183 days in the first and/or third years.
- For foreign employees, if you have worked in Singapore for a continuous period that spans 2 calendar years, and your stay is at least 183 days, you will be treated as a tax resident. This condition applies to employees who have entered Singapore but excludes directors of a company, public entertainers, or professionals. This 183-day time frame includes the period immediately before and after your employment, taking into account your physical presence.
If you do not meet any of the above mentioned conditions, you will be considered a non-resident of Singapore for tax purposes.
- Individuals who are non-residents
- Taxes imposed on employment income for non-residents are charged at a fixed rate of 15% or the higher tax amount determined by the progressive resident tax rates.
- For income derived from director’s fees, consultation fees, and other sources, non-resident individuals are subject to a tax rate of 22%. This tax rate applies to all types of income, including rental income from properties, pension income, and director’s fees, except for employment income and specific types of income subject to reduced withholding rates.
When to pay income tax in Singapore?
You must file for income tax at the end of the year’s first quarter. The filing period begins on 1 March and ends on 18 April annually.
This can be done electronically through the IRAS website. The assessment is based on the income you earned in the previous year. For instance, if you are filing in 2023, you will report the income you received or derived in 2022.
If you prefer to file using a paper form, submit the completed tax form to the IRAS headquarters by 15 April.
How to pay income tax in Singapore?
Firstly, you should check the amount you owe for income tax by logging into the myTax Portal on the IRAS website and selecting “View Account Summary”.
Once you have determined the amount, it’s time to make your payment. There are several options available to you:
- GIRO: Setting up a GIRO arrangement is convenient for paying your income tax. Once you have set it up, subsequent years’ payments can be made using this method. With GIRO, you can make monthly interest-free instalments or a single yearly payment.
- PayNow: You can generate a PayNow QR code by logging into myTax Portal or using the IRAS website’s chatbot and selecting the “Make Tax Payment” option. It’s important to remember that IRAS will only generate PayNow QR codes through these two channels and not through physical or digital notices, letters, emails, SMSes, or WhatsApp messages. For assistance with making payments, refer to the guide here.
- AXS: AXS offers various convenient options for making payments. You can use their islandwide kiosks, visit their website, or use the AXS app. Ensure you have your tax reference number ready when making a payment. It’s worth noting that each AXS transaction has a limit of S$9,999.99, but this may also depend on your credit or debit card limits. For instructions on using AXS for your payments, refer to the guide here.
The information provided was accurate at the time of publication. For more information on the latest changes and updates, head to official websites.
