Singapore Tax System: Compliance, Rate and Regulations

Singapore is known as a tax haven all over the world. It gains this status because of its business-friendly tax system, with 

• Low corporate taxes
• No capital gains tax
• The competitive yet progressive tax system Singapore has for personal income tax rates

The entire tax system is built to support the city-state and attract businesses and entrepreneurs worldwide. To help you understand the tax system of Singapore, we have prepared this guide that discusses the types of taxes, incentives, compliance requirements, and rates to fulfill all your tax requirements.

Types of Taxes in Singapore

Singapore has eight types of taxes, here is a short summary table

1. Corporate income tax
2. Individual income tax
3. Property tax
4. Goods and services tax
5. Stamp duty
6. Withholding tax
7. Casino tax
8. Motor vehicle tax
9. Custom and excise duty

Let us look into each one of them in detail.

Corporate Income Tax

Corporate tax is a tax levied on the income of companies operating in Singapore. It applies to both local and foreign companies generating income in the country.

Singapore has one of the most competitive corporate tax rates in ASEAN, with a flat 17% tax on chargeable income for both local and foreign companies. The country follows a single-tier tax system, meaning businesses pay tax only on profits, and dividends distributed to shareholders are tax-free.

Companies in Singapore are taxed only on Singapore-sourced income, including:

• Profits from business activities
• Investment income (interest, rental, royalties, and premiums)
• Other income of a revenue nature

Foreign-sourced income (such as dividends, branch profits, and service income) is taxed only when remitted to Singapore, but exemptions apply if the income was already taxed overseas at 15% or more under a Double Taxation Agreement.

• Tax basis: Singapore uses a preceding year assessment system (e.g., taxes filed in 2024 cover income from 2023).
• Filing deadline: By 30 November each year.

Personal Income Tax

Personal income tax is a tax imposed on the income earned by individuals in Singapore. It applies to income received from employment, business, rental, and other sources.

Singapore taxes individuals based on income earned within the country, while most foreign-sourced income is exempt. So who needs to pay?

• Tax residents (Singaporeans, PRs, and foreigners staying 183+ days in a year) pay progressive tax rates from 0% to 24%. Income below S$20,000 is tax-free.
• Non-residents are taxed at 15% or resident rates (whichever is higher) on employment income. Other earnings, like director’s fees, are taxed at 24%.

Taxable income includes:

• Salaries and bonuses
• Profits from business or freelance work
• Dividends, interest, and rental income
• Royalties, pensions, and annuities

Personal Income Tax Rates (2024 Onwards)

Also, there are certain important rules to keep in mind for compliance. They are:

• Filing deadline: April 15 every year.
• Auto-Inclusion Scheme (AIS): Companies with 5+ employees must submit income details directly to IRAS, simplifying tax filing for employees.

Goods and Services Tax

The Goods and Services Tax (GST) is Singapore’s version of VAT or Value Added Tax, applied to most goods and services, including imports. It is an indirect consumption tax that businesses collect from customers and remit to the government. The following are required to pay GST in Singapore:

• Companies with an annual taxable turnover exceeding SGD 1 million must register for GST and charge it on their goods and services. Businesses below this threshold can register voluntarily.
• End customers pay GST when purchasing taxable goods and services.
• Businesses and individuals bringing goods into Singapore must pay GST at the point of import.

The key rates and rules for GST compliance that you need to know are:

• Standard GST rate: 9% (effective 1 Jan 2024)
• Zero-rated GST: Applies to exports and international services
• Registration threshold: S$1 million in annual taxable turnover
• Filing deadline: Within 30 days after each accounting period (quarterly, or monthly with approval)
• GST registration is mandatory if:
  • Your taxable turnover exceeded S$1 million in the past calendar year
  • You expect turnover to exceed S$1 million in the next 12 months
  • Or you can also register voluntarily to claim GST refunds on business expenses.

Withholding Tax

Withholding tax applies when payments are made to non-residents for services rendered or income earned in Singapore. So, it is important to charge it to ensure that tax is collected at the source before funds leave the country. This is why it is applicable to:

• Non-resident companies (managed or controlled outside Singapore)
• Foreign businesses with Singapore operations
• Non-resident individuals providing professional or technical services

The table below summarizes the tax rates for withholding taxes.

Property Tax

Property tax in Singapore is levied on property ownership, based on its Annual Value (AV). The AV of a property is the estimated rental income if the property were rented out. 

The property tax rate varies depending on whether the property is owner-occupied, non-owner-occupied, or non-residential. The table below summarises the rates:

Stamp Duty

Stamp duty is a tax levied on dutiable documents related to immovable properties and shares in Singapore. It applies to 

• lease agreements
• property transfers
• mortgages.

There are three types of stamp duties for property transactions:

Conclusion

Singapore has a very tax-friendly environment, which is especially suitable for international businesses. On a glimpse, the tax system definitely looks very comprehensive, but it is well-structured and easy to follow if understood properly. The rules are clear, and compliance is straightforward, however, cannot be ignored. Late filings or non-compliance can lead to penalties and fines. So, it is better to stay informed and meet the deadlines, and you can easily manage your tax obligations.