Tax & Residency Guide in Singapore

## Comprehensive Tax Guide for Singapore

Singapore's tax system is renowned for its simplicity, transparency, and attractiveness to businesses and individuals alike. Understanding Singapore's tax regulations is crucial for residents and entities to comply with the law and optimize tax efficiency. This guide provides a detailed overview of Singapore's tax system, including residency triggers, tax system type, treaties, entity options, filing requirements, rates, deductions, when to hire an advisor, and country-specific strategies.

### Residency Triggers

#### Individual Residency: - An individual is considered a tax resident in Singapore if they reside or work in the country for at least 183 days in a calendar year. - Alternatively, if an individual stays in Singapore for at least 183 days over two consecutive years, they are deemed a tax resident for both years.

#### Company Residency: - A company is considered a tax resident in Singapore if its control and management are exercised in Singapore. - Companies incorporated in Singapore are automatically considered tax residents.

### Tax System Type

Singapore follows a territorial tax system, which means that income derived from Singapore is taxed, while foreign-sourced income is generally not subject to tax in Singapore, except for specific cases like certain types of foreign income remitted to Singapore.

### Tax Treaties

Singapore has an extensive network of Double Taxation Agreements (DTAs) with over 80 countries to prevent double taxation and provide tax certainty to individuals and entities operating internationally. These agreements typically determine which country has the right to tax specific types of income.

### Entity Options

#### Individual Tax Payer: - Individual taxpayers in Singapore are subject to progressive tax rates ranging from 0% to 22%, depending on their chargeable income. - Individuals can claim various reliefs and deductions to reduce their taxable income, such as personal reliefs, donations, and qualifying deductions.

#### Corporate Tax Payer: - Singaporean companies are subject to a flat corporate tax rate of 17%. - Certain tax incentives and exemptions are available for qualifying companies, such as the partial tax exemption and tax exemption for new start-up companies.

### Filing Requirements

#### Individual Tax Filing: - Individual tax residents in Singapore are required to file an annual income tax return by 15 April each year. - Non-residents who derive Singapore-sourced income may also need to file a tax return.

#### Corporate Tax Filing: - Singaporean companies must file their annual corporate tax return with the Inland Revenue Authority of Singapore (IRAS) within one year from the end of their financial year. - Companies are required to submit their financial statements, tax computations, and other relevant documents as part of the filing process.

### Tax Rates

- Individual tax rates in Singapore are progressive, ranging from 0% to 22%. - Corporate tax is levied at a flat rate of 17% for all companies.

### Deductions

- Individuals and companies in Singapore can claim various deductions and reliefs to reduce their taxable income, such as employment expenses, business expenses, charitable donations, and capital allowances.

### When to Hire an Advisor

Hiring a tax advisor in Singapore can be beneficial in various situations, including: - Complex tax planning or structuring. - Cross-border transactions or investments. - Compliance with specific tax regulations or reporting requirements. - Optimizing tax efficiency and managing tax risks.

### Country-Specific Strategies

#### For Individuals: - Leveraging tax reliefs and deductions to minimize taxable income. - Utilizing Central Provident Fund (CPF) contributions for retirement planning. - Understanding the implications of foreign income and how to manage tax liabilities effectively.

#### For Businesses: - Exploring tax incentives and exemptions available to qualifying companies. - Structuring operations to optimize tax efficiency and reduce tax liabilities. - Leveraging Singapore's DTA network to mitigate double taxation risks.

In conclusion, navigating Singapore's tax system requires a clear understanding of residency triggers, tax system type, treaties, entity options, filing requirements, rates, deductions, and strategic considerations. By staying informed and seeking professional advice when necessary, individuals and entities can effectively manage their tax obligations and leverage opportunities for tax optimization in Singapore.