Singapore: Offshore Legal and Tax Regimes
Taxation of Foreign Employees
The income tax rate for expatriates’ employment income is either 15% or the relevant resident tax rate, whichever produces the highest sum. Directors’ fees, consultation fees and most other income are taxed at 20%, which is generally withheld at source.
Tax clearance must be sought from the Inland Revenue Authority of Singapore (IRAS) where a foreign employee ceases to work for the company, is posted to work in an overseas location, or plans to leave Singapore for a period of more than three months. Certain exemptions from this requirement apply, where the foreign employee:
- has worked in Singapore for a period not exceeding 60 days in a calendar year (this does not apply to directors, public entertainers and people exercising a profession, vocation or employment of a similar nature);
- worked for less than 183 days in a calendar year, or a continuous 183-day period straddling two years, and his or her earnings were less than SGD20,000 per year (this does not apply to directors, public entertainers and people exercising a profession, vocation or employment of a similar nature);
- worked in Singapore for three continuous years or more and earned less than SGD20,000 per year;
- is transferred to another company in Singapore within the group due to merger, takeover or restructure; or
- is away from Singapore for training or business purposes (excluding overseas posting) for three to six months.
The employer must withhold all moneys owed to the foreign employee until clearance is given by the IRAS, or after 30 days from the date the IRAS receives notification from the employer, whichever is earlier.