Working and Living in Singapore

ASIA/PACIFIC HOME PAGE | VIEW A DIFFERENT TAX JURISDICTION

On this Page:

- Singapore: Entry and Residence
- Singapore: Work Permits
- Singapore: Taxation of Individuals
- Singapore: Health, Education and Pensions
- Singapore: Buying and Renting Real Estate

Singapore Entry and Residence

• Employment pass – for foreigners earning a fixed monthly salary of more than SGD2,500 and having recognised qualifications.
• Personalised employment pass – for either overseas foreign professionals whose last drawn monthly salary overseas was at least SGD7,000; foreign graduates from institutions of higher learning in Singapore; and those who currently hold an employment pass.
• S pass – for mid-level skilled foreigners earning a fixed monthly salary of at least SGD1,800.
• Work permit – for unskilled foreign workers.
• Dependant’s pass – Employment Pass and certain S Pass holders can apply for this pass for their spouse and for unmarried or legally adopted children under age 21 to live with them in Singapore.

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Singapore Individual Taxation

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.

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.

• 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.

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.

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Singapore Health, Education and Pensions

Health Care

Singapore’s healthcare system provides a high standard, both in terms of facilities and services, and is funded primarily via a system of compulsory contributions known as Medisave.

Medisave was introduced in 1984 as a national medical savings account scheme; Singapore resident employees (and self-employed workers, about whom more later) are obliged to contribute between 6-8% of their monthly wages to a personal Medisave account, the contents of which can be used to pay for the medical expenses of the account holder, or their close family members.

The self-employed are required to contribute to Medisave if their net trade income is more than SGD6,000 per year, with contributions based on the previous year’s net trade income, and their age.

The Central Provident Fund provides information on the rates, from 2010 onwards, here.

Contributions can be made via the Central Provident Fund website, in monthly instalments through the GIRO system, by cheque, or using cash or cash cards at Singpost offices and dedicated payment machines, or by using the NETS (Network for Electronic Transfers) system.

In addition to Medisave, the government heavily subsidises acute treatment in public hospitals, and the Central Provident Fund also operates MediShield, which is a catastrophic illness insurance scheme (operating on a co-payment and deductible system, for further details see here), provided at a relatively low cost to Singapore residents, which is designed to help meet costs brought about by major illnesses which the person’s Medisave account might not be able to meet.

For Singapore residents unable to afford healthcare treatment despite the above safeguards and schemes, the government has establishment a medical endowment fund known as Medifund.

At the time of writing, there were 10 public hospitals, 13 private hospitals, and a number of specialist clinics in Singapore.

Non-residents are able to access healthcare services in Singapore, but must pay out of their own pockets; they are not permitted to contribute to Medisave accounts. Additionally, they may pay higher costs than Singapore residents if they opt to be treated in government hospitals.

Education

Education in Singapore is divided into 6 years of primary education (4 years of foundation stage and 2 years of orientation stage education) culminating in the Primary School Leaving Examination, 4-5 years of secondary education (studying for either O or N levels, depending on whether the student is in the Special or Express streams, or the Normal (Academic) or Normal (Technical) streams, respectively).

There are several different types of secondary school, including autonomous schools (which get greater autonomy in terms of school management and – to a certain extent – curriculum) and independent schools, specialised independent schools, integrated programme schools (which permit gifted secondary age students in Singapore to pass straight to A levels, or to an International Baccalaureate or equivalent), and privately funded schools.

This is then usually followed by 2-3 years of pre-university education (studying for A-levels), and then tertiary education, studying for either a diploma or a degree.

In addition, there are also around 30 international schools in Singapore, although they are likely to be a relatively expensive option.

The tax treatment of education costs

The payment of school fees for dependents is not included in the list of permitted deduction and reliefs provided by the Inland Revenue Authority of Singapore, and where such fees are paid by an employer as a benefit in kind (of negligible interest to a self-employed entrepreneur, however), they are deemed to be taxable as income.

However, Course Fees Relief is sometimes available for individuals looking to improve their employment related skills, although it is not applicable to university or polytechnic students studying for vocational degrees or diplomas before they enter the job market, or to students working as interns, or during their university vacations.

Courses eligible for course fee relief include seminars, courses or conferences relating to the trade or vocation of the person in question, or one that relates to a career change, and/or a course, seminar or conference leading to a vocational qualification.
With regard to vocational qualifications, in order for a vocational qualification to count for Course Fees Relief, the skills or knowledge acquired must be applicable as part of the person’s vocation, or in a specific area in their industry, and the providers of the training or seminar must be registered in Singapore with the Accounting & Corporate Regulatory Authority (ACRA).

The acquisition of general skills (such as learning to use the internet, or various types of basic office software), or recreational or ‘hobby’ based skills will not qualify for the relief.

Relief should generally be claimed (in the tax return, under the ‘course fees’ heading) for fees paid in the preceding year, and the upper limit from the 2011 year of assessment is SGD5,500 (with the upper limit set at SGD3,500 prior to that). The claim should only be made for registration, examination, tuition and aptitude test fees.

Pensions

The Central Provident Fund oversees domestic pension cover.

Contributions amounting (from September 2010) to 35.5% of employee wages (15.5% from the employer, and 20% from the employee) are paid into three accounts, administered by the CPF:

• The Ordinary Account
• The Special Account
• The Medisave Account.

Contributions are tax deductible for both employer and employee.

Contributions accumulated in the Special Account relate mainly to the resident’s retirement needs, and are therefore generally invested in retirement-related financial products.

From the age of 55, CPF savings can be withdrawn, except for a CPF Minimum Sum (initially set at SGD80,000 in 2003 and being raised gradually until it reaches SGD120,000 (in 2003 terms) in 2013) which is held in a designated retirement account; distributions from this (or an annuity, if the taxpayer has chosen to purchase one from a participating provider with their Minimum Sum) begin at the age of 62 (or later, if desired).

A Minimum Sum top-up scheme is also allowed, in order to boost retirement income.

A life annuity will pay out for the lifetime of the person in question, a straightforward monthly distribution will continue until the accumulated savings are exhausted.

Since foreigners (until/unless they become permanent residents) are not permitted to contribute to the Central Provident Fund, the maintenance of a private pension scheme is likely to be necessary. Once permanent resident status is obtained, CPF contributions are required, although the self-employed are only obliged to contribute to their Medisave accounts (although voluntary contributions to the Special and Ordinary accounts are permitted).

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Singapore Buying and Renting Real Estate

Accommodation

Most housing in Singapore, for about 80% of the population, is public, much of it on purpose-built estates with shopping, social and recreational facilities built in.

Most expats however, and many richer Singaporeans, live in private properties, mostly in the form of apartment blocks or condos. Apartment units range from 50 to as large as 800 square meters. Many condos are highly sophisticated, quite up to the best US standards.

One recent development of 5-story apartments in a good area saw prices averaging SGD2,100 per square foot. Much higher prices were achieved for better quality apartments. 70% of buyers were said to be local.

Generally, prices are said to be still 10% below the peak values achieved in early 2008.

In September, 2010, amidst fears that the property market could be overheating, Singapore’s government announced immediate measures aimed at maintaining price stability, while also saying that it will continue to monitor the situation closely and will introduce additional measures if required later.

With effect from August 30, the Ministry of Finance has increased the holding period for the imposition of seller’s stamp duty (SSD) from the current one year to three years.

The government originally imposed an SSD for sellers buying residential properties on or after February 20, 2010 and selling them within a year of purchase. However, for residential properties bought on or after August 30, 2010, SSD will be imposed if these properties are sold within three years of purchase.

Specifically, the SSD levied on a residential property will be revised so that, if it is sold within the first year of purchase, the full SSD rate - 1% for the first SGD180,000 (USD132,500) of the consideration, 2% for the next SGD180,000, and 3% for the balance - will be imposed.

If the property is sold within the second year of purchase, two-thirds of the full SSD rate will be charged; and, if it is sold within the third year of purchase, one third of the full SSD rate will be imposed. No SSD will be payable by the vendor if the property is sold more than three years after it was bought.

In addition, for property buyers who already have one or more outstanding housing loans at the time of a new housing purchase, the minimum cash payment has been increased from 5% to 10% of the valuation limit, and the loan-to-value (LTV) limit has been decreased, for housing loans granted by financial institutions to these buyers from the current 80% to 70%.

The Ministry said: “While financial institutions' lending standards have remained prudent and the asset quality of housing loans has stayed robust, there are signs that more housing loans are originating at higher LTV bands of above 70%. In line with the objective of ensuring a stable and sustainable property market, lowering the LTV limit sends a clear signal to financial institutions to maintain credit standards.”

Property Taxation

Annual property taxes are imposed on property, based on estimated annual rental value; a 10% rate is imposed on non-owner occupied properties, while a 4% rate is imposed on those occupied by their owners. In the 2010 Budget, the introduction of a Progressive Property Tax Regime (PPTR) for owner-occupied properties was announced, to take effect from January 2011.

Under the PPTR, three tiers of rates are to be imposed on owner-occupied properties as follows:

• Less than SGD6,000: 0%
• Next SGD59,000: 4%
• Balance: 6%

The 10% rate will remain in place for non-owner occupied properties.

Property tax must be paid in advance, by the end of January, for the whole of the year in question.

Singapore does not impose a separate tax on capital gains (such as those received from the sale of a property), although where a person is deemed by the tax authority to be a property trader (generally determined by looking at the frequency of the property transactions, the reasons for said transactions, and the holding period, amongst other things), the gains made will be taxable at the standard rate.

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