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Tax System & Tax Rates

Tax-System-Tax-Rates

The various types of Singapore taxes along with their competitively low tax rates have garnered a lot of attention off late. In fact, one of the prime factors of the foreign entrepreneurs to relocate to the ‘Island Nation’ is Singapore’s tax system.

Singapore has become a business haven for investors and businessmen due to the friendly and economic environment created by the Singapore regime. Although, the ease with which one can incorporate their business in Singapore, makes this country an attractive destination, but another determining factor why people choose Singapore is its flexible tax system. The Singapore taxation system is well known for its attractive personal and corporate tax rates.

Governing Authority of Singapore Tax System

The governing body that looks after the Singapore taxation system is Inland Revenue Authority of Singapore (IRAS). It deals with the collection of all forms of taxes prevailing in Singapore including corporate tax, personal tax and goods and services tax. IRAS was formed in 1960, and was earlier known as the Inland Revenue department. Later on, all other revenue collecting agencies in Singapore integrated into IRAS, thereby enabling a streamlined administration and collection of tax in Singapore.

Types of Tax Systems and Tax Rates in Singapore

Corporate Tax System and Tax Rates:

Income Tax Rate
Tax on capital gains 0%
Tax on income earned on foreign soil 0%
Tax on dividends given to distributors 0%
Tax on profits of upto S$100,000 for first 3 years 0%
Tax on profits upto S$300,000 after first 3 years 8.5%
Tax on profits exceeding S$300,000 17%

 

Personal Tax System and Tax Rates:

Personal Taxable Income (in S$) Income Tax Rate (%)
Less than 20,000 0
20,000 – 30,000 2
30,000 – 40,000 3.5
40,000 – 80,000 7
80,000 – 120,000 11.5
120,000 – 160,000 15
160,000 – 200,000 17
200,000 – 320,000 18
Above 320,000 20

Goods and Services Tax: The tax imposed by the government of Singapore on all the supplies of goods and services in Singapore is termed as Goods and Services Tax. The existing rate of GST in Singapore is 7%.

Property Tax: The existing properties in Singapore including flats, offices, vacant land and private properties come under the purview of Singapore Property Tax as per the property tax act on immovable properties. The existing property tax rate for non-owner occupied properties in Singapore is 10%. The tax rate will be lower if the property is eligible to be taxed under the below mentioned owner-occupied tax rates:

Annual Property Value (S$) Tax Rate (%)
First 6,000 0
Next 59,000 4
Above 65,000 6

Withholding Tax: The tax imposed on non-resident individuals and companies who derive their income from a Singapore source for the services offered or work accomplished in Singapore, is termed as withholding tax. There are different types of payments that come under the Withholding tax regime and each kind of payment has its own existing tax rate. The general withholding tax rate for individuals or NRAs (Non Resident Professional) is a flat 15% of gross income, notwithstanding the exceptions that exist.

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