What you need to know about Singapore’s Tax System

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Singapore has one of the best tax systems in the world. Unlike many other countries, Singapore’s tax system does not employ any inheritance tax, real estate tax, capital gains tax, or wealth tax. Instead, it guarantees that the rich will pay more taxes than the poor, by implementing a progressive tax system. For example, personal income tax is a percentage of one’s income. Similarly, buyer stamp tax rates depend on the market value of the property.

The corporate tax system is designed to attract investors and encourage businesses to establish operations in Singapore. Singapore’s tax regime has attractive corporate and personal tax rates, tax relief measures, no taxation of capital gains, a one-tier corporate tax system, and extensive double tax treaties.

If you are thinking of immigrating to Singapore, below are some key facts about Singapore’s taxes that may be worth keeping in mind.

  • Currently, the Goods and Services Tax in Singapore is 7%.
  • Singapore’s personal tax rate starts at 0% and is a flat rate of 22% (S $ 320,000 and above) for residents and 15% to 22% for non-residents.
  • For personal tax, the tax year is the normal calendar year, from January 1st to December 31st. The tax return deadline is April 15th.
  • Singapore’s corporate tax rate is capped at 17% to attract a good share of reign investment.
  • For corporate tax, the company is free to decide its declared fiscal year. The deadline for filing corporate tax returns is November 30th. Taxes will be paid based on the previous year.
  • In Singapore, companies and individuals are taxed mainly on Singapore-sourced income. Profits that originate from Singapore will be taxed, based on the nature of the profits and the location of transactions generating the company’s profits.
  • Singapore follows a single-tier corporate tax system, where tax paid by a company for its profits is not imputed to the shareholders (i.e. shareholder dividends are tax-free).
  • Singapore has no capital gains tax. Capital loss expenses are correspondingly not allowed as deductions.

In addition, Singapore imposes a property tax on residential real estate and is subject to a progressive tax rate depending on whether the resident of the property is the owner. As a form of indirect wealth tax, the government imposes an additional tax known as Additional Buyer’s Stamp Duty (ABSD) on homeowners who purchase multiple residential properties.

So, are you interested in working and living in Singapore? You can do so by applying for Singapore Permanent Residency (PR), Singapore Special Investor Program (SIP), Singapore Global Investor Program (GIP), or S Pass, here at Xignam. Contact us today to speak to one of our consultants, and get ready for your immigration journey!

– Written by: Patricia Shareleen and Asahi Yip, Cayman Management Consultants

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References:

https://www.guidemesingapore.com/business-guides/taxation-and-accounting/personal-tax/singapore-personal-income-tax-guide

https://www.jdsupra.com/legalnews/wealth-taxes-in-singapore-the-present-1182861/

https://www.bloomberg.com/news/articles/2022-02-18/singapore-raises-taxes-on-wealthy-residents-homes-and-cars

https://www.singsaver.com.sg/blog/how-rich-must-you-be-to-be-affected-by-wealth-tax

https://www.paulhypepage.com/is-singapore-a-tax-haven/

https://www.guidemesingapore.com/business-guides/taxation-and-accounting/introduction-to-taxation/singapore-tax-system-and-tax-rates

 

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