Expats working in Singapore: Guide to income tax for foreigners

The cost of living in Singapore isn't exactly the lowest. In fact, according to the Economic Intelligence Unit, we're the most expensive city to live in in the world.

But if there's one "cost" Singapore does pretty well in, it's our taxes. According to Trading Economics, Singapore ranks 47 out of 156 countries for the lowest personal income tax rates in the world.

Thanks to this low tax environment, Singapore can be a pretty good place to earn money. But just how low are taxes, and do you really qualify for them as an expat if you are spending half the year somewhere else?

Here's a guide to income tax in Singapore for foreigners, so you know exactly how much you need to pay the next time the Inland Revenue Authority of Singapore (IRAS) comes knocking.

Note: Everything we talk about in this article is applicable to foreigners who are neither Singaporean Citizens nor Singapore Permanent Residents (PRs). If you're one of the latter, check out your guides to income tax filing and ways to reduce your personal income tax instead.

Are you a tax resident of Singapore?

If you are a tax resident, that means you pay income taxes at local resident rates. Mind you, being a tax resident is not dependent on being a Singapore PR or Singapore Citizen. While all PRs and citizens are tax residents, not all tax residents are Singapore PRs or citizens.

Living in Singapore a few months in a year doesn't automatically qualify you as a tax resident. Plus, thanks to the Internet, it is totally possible to be working remotely for a Singapore company and yet be based elsewhere for most of the year.

Here's how to figure out if you are a tax resident in Singapore, and what it means.

Example 1 (Scenario 1, tax resident)

You were in Singapore from Feb 1 to Sept 30 2022, for a total of 242 days. Since this is at least 183 days within one calendar year, you are a tax resident for the Year of Assessment (YA) 2023, which looks at income earned in 2022.

Example 2 (Scenario 2, tax resident)

You stayed in Singapore from Oct 15, 2021 to April 30, 2022 (197 days). During this time, you worked from Oct 20, 2021 to April 1, 2022 (162 days).

Your period of employment is at least 183 days and straddles two years — 72 of the 162 days were in 2021, and 90 days were in 2022. That means you are a tax resident for YA 2022 (for your income earned in 2021) and YA 2023 (for your income earned in 2022).

Example 3 (Scenario 1 and 2, non-resident)

You stayed in Singapore from Oct 15, 2021 to April 30, 2022 (197 days). During this time, you worked from Oct 20, 2021 to Dec 29, 2021 (70 days), and worked again from Jan 3, 2022 to April 1, 2022 (88 days).

• Your period of employment was not continuous and did not straddle two years. This means you are not a tax resident under scenario two.
• Within each calendar year (2021, 2022), you worked/stayed less than 183 days. That means you are also not a tax resident under scenario one.

Example 4 (Scenario 3, tax resident)

You worked continuously from Nov 3, 2020 to May 7, 2022, a period that is over three consecutive calendar years. You are a tax resident for YA 2021, 2022, and 2023.

What is the resident income tax rate in Singapore?

The short answer: probably lower than what you'd pay back home.

Singapore is considered a bit of a tax haven, though not on the level of the Cayman Islands or Bermuda.

Income taxes in Singapore are applied progressively, meaning you pay more if you earn more. As a tax resident, you will pay the following income tax rates in 2023 on your chargeable income, which is based on the previous year's earnings:

Chargeable income	Income tax rate	Gross tax payable
First $20,000 Next $10,000	0 per cent 2 per cent	$0 $200
First $30,000 Next $10,000	– 3.5 per cent	$200 $350
First $40,000 Next $40,000	– 7	$550 $2,800
First $80,000 Next $40,000	– 11.5 per cent	$3,350 $4,600
First $120,000 Next $40,000	– 15 per cent	$7,950 $6,000
First $160,000 Next $40,000	– 18 per cent	$13,950 $7,200
First $200,000 Next $40,000	– 19 per cent	$21,150 $7,600
First $240,000 Next $40,000	– 19.5 per cent	$28,750 $7,800
First $280,000 Next $40,000	– 20 per cent	$36,550 $8,000
First $320,000 In excess of $320,000	– 22 per cent	$44,550

Example 1

You earned $54,000 in 2022. You would pay $550 on the first $40,000, and a rate of seven per cent on the remaining $14,000.

Your total tax bill will come up to $550 + $980 (seven per cent x $14,000) = $1,530

Example 2

You earned $260,000 in 2017. You would pay $28,750 on the first $240,000, and a rate of 19.5 per cent on the remaining $20,000.

Your total tax bill will come up to $28,750 + $3,900 (19.5 per cent x $20,000) = $32,650

How much taxes do you pay if you are not a tax resident of Singapore?

So, you worked fewer than 183 days in Singapore last year. That means that you are officially not a tax resident of Singapore.

However, that doesn't necessarily mean that you get off scot-free with IRAS. You may still be taxed on your employment income earned in Singapore.

Period of employment in Singapore	Are you a tax resident?	What taxes must you pay?
61 to 182 days in a year	No	Employment is taxed at either 15 per cent or the resident progressive income tax rates, whichever is higher. Director’s fees and other income are taxed at 22 per cent. You cannot claim tax relief.
60 days or fewer	No	None, unless you are a director of a company, a public entertainer or a professional. Professionals include foreign experts, foreign speakers, king’s counsels, consultants, trainers, and coaches.

Note: Time spent overseas on business trips or on vacation still count toward your period of employment in Singapore.

Example 1

You were in Singapore for 100 days in 2022. You earned $60,000 that year from a job in Singapore.

You would have to pay the higher of the two:

• Flat tax rate of 15 per cent: The total amount payable would be $9,000 (15 per cent x $60,000).
• Resident progressive tax rate: The amount payable would be $550 on the first $40,000 and then seven per cent on the remaining $20,000. The total amount payable would be $550 + $1,400 (seven per cent x $20,000) = $1,950.

You'd thus have to pay $9,000 in YA 2023.

Example 2

You are the director of a Singapore company. In 2022, you stayed and worked in Singapore for 90 days and earned $100,000.

You would have to pay tax at a rate of 22 per cent on your director's fees. The total amount payable would be $22,000 (22 per cent x $100,000) in YA 2023.

Example 3

You were in Singapore for 50 days in 2017, during which you earned $2,000.

You do not have to pay any income tax in YA 2023 because you were employed for less than 60 days in 2022.

Example 4

You were in Singapore for 20 days in 2017. That year, you earned $80,000 worth of fees as a director of a Singapore company.

You would have to pay tax at a rate of 22 per cent on your director's fees in YA 2023. The total amount payable would be $17,600 (22 per cent x $100,000).

What tax reliefs do you qualify for?

If you are a tax resident in Singapore, you are eligible for tax reliefs.

How do tax reliefs work? Tax reliefs reduce the amount of income you have to pay taxes on. If you earned $70,000 in 2017 and were eligible for $5,000 worth of tax relief, IRAS will only charge you income tax on $65,000.

The maximum amount of tax reliefs you are entitled to is $80,000 per year.

Employees are entitled to the following types of tax reliefs:

Course Fees Relief

Under Course Fee Relief, you can claim up to $5,500 worth of tax relief a year for any fees you've incurred attending courses, seminars or conferences. But don't get too excited. Before you start Googling Korean language courses for your next trip to Seoul, take note that the Course Fee Relief only applies to learning that will help your career.

What if you want to make a career switch? IRAS does accommodate that. In YA 2023, you can claim Course Fee Relief for any course, seminar, or conference:

• In 2022 that is relevant to your current career; OR
• Between Jan 1, 2020 to Dec 31, 2021 that is relevant to your new career in 2022

Additionally, the course provider must be a Singapore-registered entity with the Accounting & Corporate Regulatory Authority. So that friendly neighbour who wants to teach you performance marketing 101? Yeah, give that a miss.

Earned Income Relief

Earned Income Relief is a type of tax relief is open to anyone whose taxable income is derived from employment, pension or a trade/business/profession/vocation. That's basically everyone who's working in Singapore, so yay!

The amount of relief you get is based on your age and how much you earned in the year prior to the Year of Assessment (ie. the year in which you pay taxes).

Age as of 31 Dec the previous year	Amount of relief
Below 55	$1,000
55 to 59	$6,000
60 and above	$8,000

For handicapped persons with permanent physical or mental disabilities, IRAS grants a higher Earned Income Relief:

Age as of 31 Dec the previous year	Amount of relief for handicapped persons
Below 55	$4,000
55 to 59	$10,000
60 and above	$12,000

Spouse / Handicapped Spouse Relief

Spouse/Handicapped Spouse Relief helps you if you pay taxes and have been supporting your spouse.

There are some conditions you and your spouse need to meet in order to qualify for the scheme:

• Your spouse was living with and/or supported by you in the previous year
• Your spouse's annual income did not exceed $4,000 that year (this income limit does not apply to handicapped spouses)

Assuming you check all the boxes you need to, the relief you get will amount to $2,000 for Spouse Relief or $5,000 for Handicapped Spouse Relief.

If you are legally separated from your spouse, you can claim Spouse/Handicapped Spouse Relief if you have made maintenance payments under a Court Order or Deed of Separation. The amount of relief you'll get will be the lowest of the following:

• Maintenance payments in the previous year;
• $2,000 for wife; or
• $5,500 for handicapped wife

If you are divorced and paying alimony to your former spouse, you cannot claim this tax relief.

Child/Handicapped Child Relief

So, your kids are unmarried and still living off of you? You might qualify for Child/Handicapped Child Relief if he or she satisfies the following conditions:

1. Was born to you and your spouse/ex-spouse, is a step-child, or is your legally-adopted child.
2. Is below the age of 16, or was studying full-time at any university/college/other educational institution at any time in the year for which you are paying taxes.
3. Did not have an annual income exceeding $4,000 in the year you're paying taxes for.

If you have a handicapped child, the second and third conditions do not apply. There is no income or age limit, and it does not matter whether he/she was a full-time student or not.

The amount of tax relief is $4,000 per child and $7,500 per handicapped child.

Handicapped Brother/Sister Relief

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You can claim Handicapped Brother/Sister Relief for a handicapped sibling or sibling-in-law. To qualify, he or she must have lived in the same household as you in the year you're being taxed for. If he or she lived separately, you must have incurred at least $2,000 supporting him or her that year.

You can claim up $5,500 per handicapped sibling or sibling-in-law. If other family members are also applying for this relief, all of you split the amount of relief the way you want to. You don't each get $5,500 relief.

Parent/Handicapped Parent Relief

If you've been supporting parents, grandparents, parents-in-law or grandparents-in-law who live in Singapore, you might be able to claim Parent/Handicapped Parent Relief for doing so.

Conditions for this relief scheme are similar to that for the spouse and child relief schemes, with a living arrangement requirement and annual income cap. The parent in question must:

• Have been living in your household in the year you're being taxed for; or apart from you and have caused you to incur $2,000 or more supporting him or her
• Be aged 55 years and above
• Not have had an annual income exceeding $4,000 (income limit does not apply for handicapped parents). Annual income includes taxable and tax-exempt income, as well as foreign-sourced income even if it was not remitted to Singapore.

Here's how much you can claim:

Is parent living with you?	Is parent handicapped?	Tax relief amount
Yes	No	$9,000
No	No	$5,500
Yes	Yes	$14,000
No	Yes	$10,000

Foreign Domestic Worker Levy (FDWL) Relief

The Foreign Domestic Worker Levy (FDWL) Relief is only for women. Men, married or not, don't qualify for this tax relief.

In the year for which you are paying taxes, you must have been:

• An employer of a foreign domestic worker (or, your husband must have been)
• Married and living with your husband, or
• Married to someone who is not a tax resident in Singapore, or
• Separated from your husband, divorced or widowed, and have children who live with you and on whom you can claim Child Relief (see above).

If you're eligible for this tax relief, you'll be able to claim relief worth two times the foreign domestic worker levy that you were required to pay.

Supplementary Retirement Scheme (SRS)

The Supplementary Retirement Scheme (SRS) is a scheme which is designed to encourage you to save and invest for retirement. It is open to citizens, PRs and foreigners who are earning an income.

You open an SRS account with one of three banks (DBS, OCBC or UOB) and then are free to make contributions. Once you've done that, you're entitled to tax relief for the amount of SRS contributions made by you or your employer in the preceding year.

Tax deduction for donations

Donating to charity is tax-deductible. Meaning to say if you make a donation, your chargeable income on which IRAS calculates tax will be reduced.

You can choose to donate cash, shares, computers, artefacts, land and buildings or public art to approved charities or the government. But no, that old sofa you gave to the Salvation Army does not count as an artefact.

The tax deduction for donations is 250 per cent. That means that if you donate just $10, you'll get $25 knocked off your taxable income. While this rate can change, Budget 2023 confirmed it to be 250 per cent at least until Dec 31, 2026.

How do you file your taxes?

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The deadline for tax filing is April 18 every year for those doing it electronically, and April 15 for those going old school and using the paper form.

Paying taxes in Singapore is super easy. As an employee, you will not need to hire an accountant to file your taxes for you.

Logging in to the IRAS myTax Portal

Simply log in to IRAS’s myTax Portal using Singpass or your Singpass Foreign user Account (SFA).

It's a good idea to register for Singpass if you don't already have that done. Singpass is a digital identity that'll get you quick, easy, and secure access to a whole host of government services, including tools from the Central Provident Fund (for Singapore citizens and PRs), Housing and Development Board (HDB), Immigration & Checkpoints Authority (ICA), and even banks and insurance agencies.

For situations in which you can't use the regular Singpass, you can use an SFA. Namely, these situations happen when you don't have a Singapore Government-issued ID (i.e. NRIC or FIN), or yours is going to expire. For example, if you just renounced your Singaporean citizenship or  Permanent Residence, or if you cancelled your work pass.

You can apply for SFA with your National ID (e.g. Identity Card) or a passport document with a validity of at least six months, a valid email address, and (if you have one) your tax reference number.

Filing your taxes

Once you have logged in, you simply have to fill in information about your income (if your employer has not already done so) and tax reliefs being claimed. That's it. Check out our full guide to filing taxes for a step-by-step breakdown.

If you'd prefer to file your taxes using a physical form, IRAS will send one to your mailing address when the time comes.

ALSO READ: Income tax filing 2023: Step-by-step guide to surviving tax season

This article was first published in MoneySmart.