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Singapore: Wealth Management

The Tax System and Wealth

All individuals pay tax on income earned or received in Singapore; however overseas income received in Singapore after January 1, 2004, including income paid into a Singapore bank account (but excluding overseas income received through a partnership in Singapore), is not taxable.

Income tax is assessed based on a preceding year basis.

Tax Rates in 2010

Individual

The income tax rates for resident individuals are as follows:

Chargeable income
Rate (%)
Gross tax payable (SGD)
First SGD20,000
Next SGD10,000
0
3.5
0
350
First SGD30,000
Next SGD10,000
–5.5
350
550
First SGD40,000
Next SGD40,000
–8.5
900
3,400
First SGD80,000
Next SGD80,000
–14
4,300
11,200
First SGD160,000
Next SGD160,000
–17
15,500
27,200
First SGD320,000
Next SGD320,000
–20
42,700

There is a one-off personal income tax rebate of 20% for resident individuals, subject to a cap of SGD2,000, for tax payable for year of assessment 2009.

The income tax rate for non-residents’ employment income is either 15% or the relevant resident tax rate, whichever produces the highest sum. Director's fees, consultation fees and most other income are taxed at 20%, which is generally withheld at source.

Certain other payments to non-resident individuals are subject to withholding tax at source.

The majority of dividend payments received are exempt from income tax.

Corporate

The normal rate of Profits Tax is 17%.

Capital gains

Generally, capital gains realised from the sale of property in Singapore, or derived from buying and selling shares or other financial instruments, are not subject to tax.

If, however, such sale of property or buying and selling of shares and other financial instruments are regarded as a trade, the gain may be regarded as taxable income.

Indirect Taxes

Companies must register for goods and services tax (GST) if their turnover for the previous 12 months exceeds SGD1m, or if the business reasonably expects its turnover will exceed SGD1m over the following 12 months. Voluntary registration is permitted, for example where the company intends to make taxable supplies, only supplies goods outside Singapore, or makes exempt supplies of financial services that are also deemed to be international services. A foreign company registering for GST must appoint a Singapore agent to act on its behalf on all its GST matters, including the accounting and payment of GST.

The standard rate of GST is 7%, and applies to most sales of goods and services made in Singapore. Exports and related international services are zero-rated. Financial services and the sale or lease of residential properties are exempt from GST.

Real Estate Taxes

Property tax is charged on immovable property, including a house, building and land. The amount of tax due is calculated based on a percentage (tax rate) of the annual value of a property. The tax rate is 10%, or 4% where the property is granted an owner-occupier concession.

From January 1, 2011, the 4% tax rate will be replaced by a three-tier tax rate based on the annual value, as follows:

Annual value
Tax rate
First SGD6,000
0%
Next SGD59,000
4%
Above SGD65,000
6%

Other Taxes.

Stamp duty is payable on certain executed documents relating to properties and shares, or interest in properties and shares. Such documents include a lease, sale, purchase, gift or mortgage of property. Liability arises once the document is executed, even if the transaction itself has been aborted.

The amount of duty payable varies according to the transaction. For example, in the case of a mortgage, the duty is SGD4 for every SGD1,000 or part thereof, subject to a maximum duty payable of SGD500..

Withholding Taxes

There are no domestic withholding taxes on dividends, interest or royalties.

Evidently this is a tax regime which is conducive to the accumulation of wealth. The number of rich people and their wealth is reportedly growing at more than 30% annually in Singapore, double the global average.

 

 

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