After spending a few months in the garden city, Singapore, you might have some questions regarding taxes on your income, after all, information on it cannot be found readily online. But fret not, for I am here to help!
First, ask yourself:
- Has it been 4 years since you first arrived in Singapore?
- Are you a Singapore Tax Resident* for that particular year?
- In that particular year, were you out of Singapore for business reasons for at least 90 days?
- Is your total Singapore employment income at least SGD$160,000?
If your answers to the above are all yes, CONGRATULATIONS! You might eligible for a tax incentive “Non-Ordinary Resident” (“NOR”) scheme, subjected to other conditions.
*On a general note, you will be accorded a Tax Resident Status if you are:
- Singapore Citizen (SC) or Singapore Permanent Resident (SPR) who resides in Singapore except for temporary absences; or
- Foreigner who has stayed / worked in Singapore (excludes director of a company) for 183 days or more in the previous year. i.e. the year before the YA; or
- Foreigner who has stayed / worked in Singapore at least 183 days for a continuous period over two years; or
- Foreigner who has stayed / worked in Singapore for three consecutive years.
If none of the above is applicable on you, there is a high chance that you are a non-resident of Singapore for that calendar year, meaning more taxes to be paid.
You may refer to the table below for the tax rates which you would need to pay based on your current tax status:
Who is eligible for the NOR Scheme?
You must fulfill the following conditions:
- be a non-resident in the past three years of assessment (YA); and
- in that YA in which you first qualify for the NOR status, you must be a Singapore tax resident.
Satisfaction of the above accords you NOR status for five consecutive YAs, starting from the YA in which you first meet the criteria.
Even if you missed out the YA which you first meet the criteria, don’t worry, you still can apply for NOR in any mid of the 5 years on the qualified balance YA.
The benefits of the NOR scheme is as explained below.
1. Time Apportionment of Singapore Employment Income
You will not be taxed on the portion of your Singapore employment income that corresponds to the number of days you have spent outside Singapore for business reasons, as a resident Singapore employee, except for:
- Director's fees
- Any amount of income tax payable in Singapore that is borne, directly or indirectly, by your employer.
2. Tax Exemption of Employer's Contribution to Non-Mandatory Overseas Pension Fund or Social Security Scheme
If you are a resident Singapore employee, tax exemption, with a cap, will be applied on contribution made by your employer to any non-mandatory overseas contribution scheme subject to qualifying conditions given that your employer does not claim a deduction for the contribution.
How Should Foreigners File for Taxes in Singapore
As income is taxed on a preceding year basis i.e. what you earn this year will be taxed next year, the annual filing season starts in early March, ending in mid-April.
Before the annual filing season, you are advised to apply for your SingPass account or IRAS pin. These can be used to log in to IRAS tax portal, where you can view your tax bills, instalment plan, and correspondences online.
During the filing season, tax payers will receive a tax package such as:
- Filing package – Obtain a copy of IR8A / IR8E (return of Employee’s Remuneration for the Year ended 31 December) from your employer and proceed to file your return.
- No-Filing Service (NFS) package – You do not need to file an Income Tax Return as you only had ^auto-included income in the preceding year.
^Under the Auto-inclusion scheme (AIS), employers submit the employment income information of their employees electronically to IRAS. The submitted information will be automatically included in the employees’ income tax assessment.
Way to reduce tax
These are some of the expenses which you can claim for via filing for tax return:
- Allowable expenses
- Reliefs (e.g. spouse and child)
After processing your tax assessment, IRAS will send your tax bill to your last known address based on their record. From then, you have exactly 30 days from the date of tax bill to complete payment. You can pay your taxes via General Inter-bank Recurring Order (GIRO), internet banking, ATM card at any AXS station or SAM, use NETS over the counter at any Singapore Post Branch.
Here is an infographic to help you grasp the situation better:
(Image by IRAS)
In conclusion, taxes have always been sensitive topics and unfortunately, Singapore is no exception. It is undoubtedly quite stressful for locals to effectively take all the necessary steps they need to take for proper compliance, let alone foreigners who are new to the system.
Fortunately, here at OA International Holdings, we have a team of experts who can assist you every step of the way. What are you waiting for? Get in touch with us right away for proper guidance by speaking to our tax person in-charge Yik Xin who is an ATP (income tax) at +65 6914 1111, Extension: 311 and/or drop us an email at email@example.com.