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Guide to Singapore's Tax System and Rates in 2023

Are you looking to move to, start a business, or invest in Singapore? If so, this guide will help you to understand more about the tax system in Singapore. 

While most people know about Singapore's tax system is good for corporate and personal tax rates, this guide will help you understand exactly what makes Singapore taxes so attractive, and how it has evolved since the 1960s.

Current Tax Rates in Singapore

Personal Income Tax Rates/Individual Income Tax Rates

Based on an individual's tax residency status, only tax residents for a particular year of assessment are liable to pay for personal income tax in Singapore. You are considered to be a tax resident if you are a:

1. Singapore Citizen or Singapore Permanent Resident who resides in Singapore; or

2. Foreigner who has stayed/worked in Singapore

  • For at least 183 days in the previous calendar year; or
  • Continuously for 3 consecutive years, even if the period of stay in Singapore may be less than 183 days in the first and/or third year; or

3. Foreigner who has worked in Singapore for a continuous period straddling 2 calendar years and at least 183 days. This excludes directors of a company, public entertainers, or professionals.

Chargeable Income Income Tax Rate (%) Gross Tax Payable ($)
First $20,000
Next $10,000
0
2
0
200
First $30,000
Next $10,000
-
3.50
200
350
First $40,000
Next $40,000
-
7
550
2,800
First $80,000
Next $40,000
-
11.5
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
Next $180,000
-
22
44,550
39,600
First $500,000
Next $500,000
-
23
84,150
115,000
First $1,000,000
In excess of $1,000,000
-
24
199,150

Corporate Tax Rates

All Singapore-incorporated companies and foreign companies that have a branch office or subsidiary in Singapore are liable to pay corporate income tax.

As long as a company operates and generates income in Singapore, whether it is through trading, or providing services, will be liable to pay corporate income tax. Even if foreign-sourced taxable income is remitted or deemed to be remitted to Singapore.

The Corporate Tax Rate in Singapore is a flat 17%.

Types of Taxes in Singapore

Type of Taxes Singapore

Types of Tax in Singapore Description of Tax
Income Tax Chargeable on income of both individuals and companies
Withholding Tax Tax collected from non-resident companies and persons who earn an income from Singapore.
Property Tax Applicable to owners of properties based on expected rental income derived from the values of the properties
Estate Duty Have been abolished since 2008
Motor Vehicle Taxes Taxes include import duties, road taxes, and Certificate of Entitlement (COE). Imposed to deter excessive car ownership and road congestion.
Customs and Excise Duties Mainly imposed on Motor Vehicle, Tobacco, Alcohol, and Petroleum products. 
Goods and Services Tax (GST) This is a percentage of the total bill spent. It is a tax based on consumption by both retail and corporate consumers. The GST does not apply to financial services and residential properties. This is known to many as Value Added Tax (VAT).
Betting Taxes Duties on private lottery, betting, and sweepstake providers. 
Stamp Duty Imposed on commercial and legal documents relating to shares and stocks and immovable properties.
Foreign Worker Levy Regulates the employment of foreign workers in Singapore
Airport Passenger Service and Security Fee Service fees and security fees per embarking passenger at the airport.

Inland Revenue Authority of Singapore (IRAS)

The Inland Revenue Authority of Singapore (IRAS) is the governing body in Singapore that integrates all key revenue collection agencies into one. This allows the administration and collection of taxes and revenue to be more streamlined and better managed. Ever since it was formed in 1960, IRAS has since made known to be well efficient and service-friendly.

IRAS is a one-stop service for most tax-related matters in Singapore. This includes income tax, property tax, goods and services tax, estate duty, withholding tax, betting tax, and stamp duty. IRAS plays an important part in tax policy formation and formulation. IRAS also actively monitors changes in the external economic environment and tax environment to identify a need for policy review and changes. IRAS aims to create a competitive tax environment that encourages economic growth.

History of Taxation in Singapore

Before the 1960s

Prior to World War I, there were discussions in place to introduce a personal income tax system to raise revenue for the war effort. It was thus implemented briefly during World War I and World War II. However, due to the unpopular response and unrest due to the implementation, income tax was not considered a success.

After World War II, there was a need for new infrastructure and fresh revenue sources. This need then reignites the need for income tax implementation. In 1947, under the British colonial government, income tax was reintroduced and imposed in 1948. It was greatly based on the Model Colonial Territories Income Tax Ordinance 1922 which was created for British colonies at that time. Thus, you can see the resemblance with those of Malaysia, Australia, New Zealand, and South Africa.

1960s

Singapore gained independence in 1965 and promoted rapid industrialization as well as building an export-focused industrial base. The effort paid off and accelerated growth and employment. The government supported these industries by providing tax incentives. One of which is the Economic Expansion Incentives Act that was introduced in 1967 for companies that export and allows these companies to enjoy as much as 90% tax exemption on the increased export tax. Interest paid on foreign loans granted to a local industrial company was tax-exempted.

1970s

In the 1970s, the government shifted its focus to the service sector. From 1973, tax policy supported the financial sector with the exemption of interest on Asian dollar bonds. The shipping industry also benefited from tax exemption for the operations and charter of Singapore ships. Certain tax measures were also introduced to support urban redevelopment. Contributions to the Central Provident Fund (CPF) were considered tax deductible and still are today. Many other tax relief measures were also introduced.

1980s

In the 1980s, Singapore was more developed and became an expensive place for businesses. Measures were introduced to revamp the economy and make Singapore more competitive for businesses. Government policies, incentives, and taxes were considered for transformation, and in the late 1980s, changes were made to both corporate and individual income taxes. The changes lowered the corporate tax rates from 40% to 33% in 1987.

1990s

In the 1990s, there was a focus to lower direct taxes and to implement indirect taxes. As such, the Goods and Services Tax (GST) was introduced in 1994. As mentioned above, the GST is a tax on domestic consumption and applies to all goods and services supplied except for financial and residential properties.

Present

From the 2000s up till now, the government has been proactively encouraging innovation and entrepreneurship. Many new policies and measures were introduced to attract foreign talent and investment. The Singapore tax rate for individual and corporate were further lowered and sits at 17% for corporates and ranges from 0% to 24% for individuals.

Final Thoughts

Singapore has come a long way, transforming Singapore into an attractive place for both foreign businesses and individuals. In conclusion, both the Singapore government and IRAS have contributed greatly to the transformation of Singapore. Now, businesses and individuals operating and working in Singapore will be able to enjoy greater growth due to the attractive tax rates in Singapore.

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FAQs

What is the governing body in Singapore for taxes?

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The Inland Revenue Authority of Singapore (IRAS) is the governing body for most tax matters in Singapore.

What is the corporate income tax rate in Singapore?

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What is the personal income tax rate in Singapore?

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When was income tax introduced in Singapore?

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