Regardless of location, income tax remains one of those facts of life that we just can’t avoid. Each country has its own system for taxation and an expat needs to understand what their obligations are when relocating abroad for work.
The income tax system for expats in Singapore is not hugely complicated or wildly different to the system used in the UK. There are two different tax status for foreigners in Singapore, which depends on the individual’s ‘tax residency status’. So, the first step in understanding how much tax is owed is to determine whether a person is a ‘tax resident’ or a ‘non-resident’ for tax purposes.

Tax residency status

The majority of British expats moving to Singapore will do so long-term, and therefore are likely to fall into the ‘tax resident’ status. Tax residency is worked out based on the period of stay in Singapore, inclusive of work. For a person who is in Singapore for at least 183 days in a year, they are considered a tax resident for that year. If the stay bridges two different years, then residency is defined as at least 183 days for a continuous period over the two years, and that person is considered a tax resident for both years. Otherwise, a stay of three consecutive years means that a person is a tax resident for all three years.
In all of these cases, a tax resident has their income taxed at ‘progressive resident rates’, and there may be some tax reliefs available, the same as a native resident.
While it is less common among expats, it is worth knowing when a person is regarded as a ‘non-resident’ for tax purposes. For instance, if the stay in Singapore is between 61 and 182 days inclusive of work, then a person is considered a non-resident. Employment income is then taxed at a fixed rate of 15% or the same progressive resident rates, whichever is higher. Director’s fees and any other income is taxed at 22%, and there are no tax reliefs available.
For anyone who is in Singapore and employed for less than 60 days, this short-term employment income is exempt from tax, unless a person is a director of a company, public entertainer or professional in Singapore for this time. This does not include people who are out of Singapore for work reasons related to a Singapore employment.

Paying income tax

Based on this, most foreigners in Singapore are likely to have to pay the progressive resident tax rates, just as in the UK, though there are more bands. For the Year of Assessment 2017, the income tax rate varies up to a maximum of 22%. The first $20,000 earned is tax free, and then it rises through the different bands. The final band is for those who earn in excess of $320,000, which is when a rate of 22% is payable. A full list of the different tax bands is available here: https://www.iras.gov.sg/IRASHome/Individuals/Foreigners/Working-out-your-taxes/Tax-Rates-for-Resident-and-Non-Residents/.
Income is assessed based on the preceding year, and the tax year ends on 31st December. The tax return is then due by 15 April and bills are usually send by September. All employment income is taxed, as well as any bonuses earned, as well as any housing or stock options. Any income that is earned overseas is tax exempt. Certain tax reliefs are also available, such as some expenses. It is worth engaging a good accountant to ensure that the right tax rates and reliefs are applied.
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