The Singaporean tax system is one of the best-designed tax systems that you can find these days. There are several different reasons why so many investors turn to the Singaporean tax system when it comes to establishing their business operations. The ease of setting up and operating a business in Singapore is one of the biggest motivators.
Another important factor that you should know about here is called Singapore’s tax regime. This tax regime is best known for its highly personal and corporate tax rates, one-tier tax system, extensive double tax treaties, tax relief measures, and absence of capital gains tax.
It’s also important to note that person including things like corporations, trustees, partnerships, and bodies of the person carrying on just about any trade, business, or profession that Singapore has to offer. They are chargeable to tax on all profits that are either arising or derived from Singapore. There is certain foreign-sourced income from that same trade, business, or profession. However, this excludes any profits that have risen from the sale of capital assets.
The main purpose of this whole text is to help you become more familiar with the Singaporean tax system. As well as the Singaporean tax rates in general. And now, let’s say a few things about what types of taxes you can expect to deal with in Singapore!
9 Types of Taxes in Singapore
Singapore is known for having 9 different types of taxes. They are Income Tax, Property Tax, Estate Duty, Motor Vehicles Taxes, Betting Taxes, Stamp Duty, Goods & Services Tax, Customs & Excise Duties, and Other Taxes.
1. Income Tax is chargeable on the income of both individuals and companies.
2. Property Tax is imposed on owners of properties. It is based on the expected rental values of those properties.
3. Estate Duty has been in effect since February 15, 2008.
4. Motor Vehicle Taxes are those that are imposed on motor vehicles. It is also important to note that these taxes are imposed on both road congestion & curb car ownership.
5. Betting Taxes are all duties that are imposed on things like betting, sweep-stake, and lottery.
6. Stamp Duty is imposed on both legal and commercial documents that have anything to do with immovable property and stock & shares.
7. Goods & Services Tax is related to consumption. These taxes are paid when money is spent on things like goods and services. Including products that have been imported from other countries. In some other countries, this type of tax is also known as Value Added Tax.
8. Customs & Excise Duties are not that common in Singapore since it is a free port. However, they still DO exist and they are typically imposed on things like liquors, tobacco, and petroleum products. Also, not that many products are subject to import duties. The reason for this is that these duties are mainly linked to things like motor vehicles, liquors, tobacco, and petroleum products.
9. And last but not least, we have Other Taxes. The two main things that fall into this category are the airport passenger service charge and the foreign worker levy. When it comes to the foreign worker levy, its main purpose is to regulate the employment of people who have come from foreign countries in Singapore.
The Most Important Things About the Singaporean Income Tax System
Singapore is the type of country that follows a territorial basis of taxation. What this means is that both individuals and companies are taxed mainly on income that is sourced in Singapore. Income that is sourced in foreign countries. Such as dividends, service income, or branch profits will only be taxed after it has been either remitted or deemed remitted into Singapore.
When it comes to the Singaporean corporate tax rate, it is capped at 17%. By keeping its corporate rates on a competitive level, Singapore continues to attract a pretty good amount of investment from foreign countries. You should also know that Singapore follows a special tax system. In which taxes that are paid by a company on its profits are not imputed to the shareholders.
As far as Singaporean personal tax rates, they start at 0% and can go all the way up to 22% for residents. When it comes to non-residents, there is a flat rate of 15% to 22% in place. Technical and management fees, royalties, interest, director’s fees paid to non-residents, and rentals from movable properties. These are all subject to withholding tax in Singapore.
For personal taxes, the tax year is measured the same way as a traditional year. This means that it is measured from the 1st of January to the 31st of December. The deadline for filing a personal tax return falls on April 15, and the deadline for filing a corporate tax return falls on November 30.
There is no capital gains tax in Singapore. With this in mind, capital loss expenses cannot be used as deductions. Planning your corporate tax effectively can help you save a lot of money.
Singapore Tax Governing Authority
The Income Tax Act of Singapore is all about dealing with things that have anything to do with either individual or corporate taxation in Singapore. The Inland Revenue Authority of Singapore (IRAS) is responsible for collecting six of the nine types of tax in Singapore. This includes income tax, goods & services tax, property tax, stamp duties, betting taxes, and estate duty. One of the main goals of IRAS is to provide important policy inputs, as well as both the administrative and the technical implications of each policy.
It is also responsible for identifying areas that could be in for some policy reviews or changes. Simply put, the main purpose of IRAS is to foster a competitive tax environment to encourage both growth and enterprise. Some other functions that are performed by IRAS include providing advice on property valuation. Representing the government in tax treaty negotiations, and more. These are some of the most important things that you should know about the Singaporean tax system, as well as about its tax rates! We hope that you will have an easier time understanding how this whole system works now.