Myths and Reality in Singapore Personal
For most people the Singapore tax return is a simple process and a welcome relief from
long and convoluted returns that are required in many countries. There are, however,
enough complexities to give rise to widely held misconceptions and wasted opportunities.
Here are some tax ‘myths’ and the ‘reality’.
“I must complete my tax return by Singapore taxes income on a preceding year basis. This
the end of the year” means income earned in calendar year 2007 will only be taxed
in the tax Year of Assessment 2008. Tax returns are usually
issued in February and are due for filing by 15 April 2008.
“If I don’t get a tax return I don’t A tax return need not be made only if your total income con-
have to complete one.” sists of employment income and is less than S$20,000. Other-
wise you should request a tax return by 14 April 2006.
“My employer pays my bonus and All remuneration and taxable benefits-in-kind related to your
part of my salary into my offshore Singapore employment are taxed here, irrespective of where
bank account so I don’t report it you are paid and your employer should have reported it on
for tax.” your Form IR8A, the annual statement of remuneration and
If you relocated to Singapore in the last few years and travel
extensively or contribute to a foreign pension plan, you may
be eligible for beneficial treatments under the Not Ordinarily
“I live here but to save tax I set This is recipe for serious problems and in the worse case the
up an offshore company for my Inland Revenue may regard this to be tax evasion. At a mini-
employer to pay my salary to. I mum, your employer is effectively paying a service fee and
only pay tax on what I pay myself has an obligation to deduct 18% tax from those payments.
from my company.” Your offshore company no doubt has a taxable presence in
Singapore and tax will be payable on the income earned.
There are also probably Companies Act registration obligations
as the company is doing business in Singapore.
18 January 2008
The information contained in this circular is for general reference only. While all reasonable care has been taken in the preparation of this
circular, neither The Iyer Practice nor its affiliated entities can accept any liability for any action taken as a result of reading its contents
without consulting us with regard to all relevant factors.
“I didn’t report the housing provided Employers are obliged to provide a Form IR8A and appen-
by my employer because they didn’t dices by 1 March 2008 stating your remuneration and tax-
include it in my Form IR8A.” able benefits-in-kind for 2007. However, you should
check this carefully since you have an overriding obliga-
tion as taxpayer to report the correct income and taxable
“I arrived in Singapore in late 2007 You will only be subject to tax if you worked more than 60
and was told I have to pay 15% flat days in Singapore during 2007. The 15% flat rate applies
tax.” to non-residents, i.e. people who were not physically pre-
sent in Singapore or in Singapore employment more than
183 days in 2007. By concession, on application, you may
be granted resident status if your employment is expected
to last through to any time in 2009. Paying tax at resi-
dent scale rates will generally be lower than the flat 15%
“My employer says it must deduct There is no payroll tax in Singapore and only Singapore
amounts from salary as for tax pur- citizens and Permanent Residents are permitted to con-
poses” tribute to the Central Provident Fund.
However, monies may have been withheld if you are leav-
ing Singapore. Every employer must notify the Inland
Revenue when an employee, who is not a citizen of Singa-
pore, ceases to be employed in Singapore / intends to
leave Singapore for a period of more than three months.
A written notice (Form IR21) must be given to the Inland
Revenue, indicating the expected date of cessation / de-
parture of the employee, at least, one month before the
cessation / departure and monies due to the employee
should be retained by the employer to settle the em-
ployee’s tax liability.