Taxability of Income from Employment
Updated: Aug 14
Taxability of Income from Employment in Singapore and Outside Singapore
Employment in Singapore for Foreign Employers
When you work in Singapore for a foreign employer, your income earned from working in Singapore for foreign employers is subject to tax in Singapore.
Foreign employers include representative offices registered with Enterprise Singapore and other entities not registered in Singapore. Foreign employers are considered non-resident employers for tax purposes.
Income to be Assessed
(1) Employment exercised in Singapore for not more than 60 days in a calendar year
If you are a non-resident and exercise employment here for 60 days or less in a calendar year, you will be exempted from tax on your income here. This rule does not apply if your stay covers three continuous years or more.
(2) Employment exercised in Singapore for 61 to 182 days in a calendar year
If you do not fall under (1) and stay or work in Singapore for 61 to 182 days in a calendar year, you will be regarded as a non-resident. Your employment income will be taxed at either a flat 15% (no personal reliefs would be granted) or progressive resident rates for individuals, whichever gives rise to a higher tax.
(3) Employment exercised in Singapore for 183 days or more in a calendar year
If you stay or work in Singapore for 183 days or more in a calendar year, you will be regarded as a tax resident. Your employment income, after deduction of tax reliefs, will be taxed at progressive resident rates for individuals.
(4) Stay or Work in Singapore for Three Consecutive Years
If you stay or work in Singapore for three consecutive years, your income for all years will be taxed at resident rates for individuals.
Total Days of Employment in Singapore
For an employee who is based in Singapore, the number of days of employment in Singapore includes weekends and public holidays. In addition, any absences from Singapore that are temporary (e.g. overseas vacation leave) or incidental to your employment (e.g. business trips) will also be included in the count of total days of employment in Singapore.
Filing and Paying Income Tax
You need to declare the taxable overseas income under 'employment income' in your tax return. Income that is taxable includes salary, bonus, allowances, honorarium, per diem, accommodation, leave passages, and value of any benefits-in-kind (e.g. food, transport) provided to you by your employer.
The income tax filing takes place during Mar to Apr each year.
The foreign employer should prepare the Form IR8A and related appendices for you by 1 March each year. You have to file your tax return by 15 April each year.
After you have filed your tax return, you will receive a tax bill (Notice of Assessment). You must pay your tax within one month from the date of the tax bill. Payment by GIRO is not applicable for employees of foreign employers.
Letter of Guarantee (LOG) Requirement
A non-Singapore citizen is required to forward a Letter of Guarantee from a local bank or an established limited company in Singapore, to cover the estimated tax payable for the coming Year of Assessment.
Please note the following:
The Letter of Guarantee issued by a Representative Office is not acceptable.
The Letter of Guarantee has to be submitted to IRAS on a yearly basis.
In the absence of the Letter of Guarantee, an advance assessment will be issued to you and you are required to settle your tax in full.
You are still required to file the income tax return even if you have submitted the LOG or if an advance assessment has been issued to you.
The letter of guarantee has to be signed by an authorized personnel of the Company.
Tax Clearance Obligations
Your employer will have to seek Tax Clearance when you cease employment in Singapore. Your employer should complete the Form IR21 at least one month before you cease employment or leave Singapore.
All taxes must be paid before you leave Singapore.
You can claim for exemption from Singapore income tax in respect of Dependent Personal Services rendered in Singapore under Exemption under Avoidance of Double Taxation Agreement.
Employment Outside Singapore
If you are contracted to be based overseas to render your full employment services wholly outside Singapore, you are not liable to tax in Singapore as your employment income is sourced outside Singapore.
It does not matter where and how you are being paid. Your employer will not need to prepare the Form IR8A for you to file your tax in Singapore.
How Bestar can Help
Bestar can help with the taxability of income from employment in Singapore in a number of ways:
Provide guidance on the taxability of different types of employment income. Bestar can help you understand which types of employment income are taxable in Singapore, and which types are exempt. This can be helpful if you are unsure about whether your income is taxable, or if you are considering taking on a new job that may have different tax implications.
Calculate your tax liability. Bestar can help you calculate your tax liability for employment income, taking into account your personal circumstances and the different tax rates that apply. This can save you time and effort, and help you ensure that you are paying the correct amount of tax.
Advise on tax planning strategies. Bestar can advise you on tax planning strategies that can help you minimize your tax liability on employment income. This may include things like claiming tax deductions or exemptions, or investing in tax-deferred savings plans.
Represent you at tax audits. If you are audited by the Inland Revenue Authority of Singapore (IRAS), Bestar can represent you at the audit. This can help ensure that your rights are protected and that you are treated fairly.
Overall, Bestar can be a valuable resource for anyone who wants to understand the taxability of income from employment in Singapore. They can provide guidance, calculation, advice, and representation to help you minimize your tax liability and stay compliant with the law.
Here are some specific examples of how Bestar can help with the taxability of income from employment in Singapore:
If you are a Singapore resident who works for a foreign employer, Bestar can help you understand whether your employment income is taxable in Singapore. If it is, they can help you calculate your tax liability and advise you on tax planning strategies.
If you are a non-resident who works in Singapore, Bestar can help you understand the different tax rates that apply to your employment income. They can also help you calculate your tax liability and represent you at tax audits.
If you are considering taking on a new job, Bestar can help you understand the tax implications of the job. This includes things like the different types of income that will be taxable, the tax rates that apply, and the availability of tax deductions and exemptions.
If you are unsure about whether your income is taxable, Bestar can provide guidance on the taxability of different types of income. They can also help you understand the specific tax rules that apply to your situation.
If you have any questions about the taxability of income from employment in Singapore, please contact Bestar for assistance.