For a variety of reasons, investors choose Singapore as the location for their activities. The simplicity of starting and running a business is a major driver.

The tax system of Singapore, which is renowned for its favourable corporate and individual tax rates, tax relief programs, lack of a capital gains tax, one-tier tax system, and several double tax treaties, is another important factor.

The goal of this guide is to give a general overview of Singapore’s tax system and tax rates. Persons, including corporations, partnerships, trustees, and bodies of persons carrying on any trade, profession, or business in Singapore are chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Singapore and certain foreign-sourced income from such trade, profession, or business.

Current Tax Rates in Singapore

Corporate Tax Rates

Income	Tax Rate
Tax rate on corporate profits for up to 300,000 SGD	Effective tax rate at 8.5%
Tax rate on corporate profits above 300,000 SGD	17%
Tax rate on capital gains accrued by the company	0%
Tax rate on dividend distribution to shareholders	0%
Tax rate on foreign-sourced income not brought into Singapore	0%
Tax rate on foreign-sourced income brought into Singapore	0 – 17% subject to conditions

Personal Tax Rates

Income	Tax Rate
Tax rate on first 20,000	0%
Tax rate on next 10,000	2%
Tax rate on next 10,000	3.5%
Tax rate on next 40,000	7%
Tax rate on next 40,000	11.5%
Tax rate on next 40,000	15%
Tax rate on next 40,000	18%
Tax rate on next 40,000	19%
Tax rate on next 40,000	19.5%
Tax rate on next 40,000	20%
Tax rate on above 320,000	22%
Tax rate on capital gains	0%
Tax rate on dividends received from Singapore company	0%

Key Facts about the Singapore Income Tax System

• Singapore uses a territorial taxation system. In other words, businesses and people pay taxes primarily on revenue earned in Singapore. If foreign-sourced income (such as branch earnings, dividends, service income, etc.) has not already been taxed in a country with a headline tax rate of at least 15%, it will be taxed in Singapore when it is remitted or presumed remitted. Although the idea of where one’s money comes from may seem straightforward, in practice it is frequently difficult and contentious to apply. There isn’t a general rule that works in every situation. Whether profits are generated in Singapore or are derived there depends on the type of gains and the transactions that generate them.

• The maximum corporate tax rate in Singapore is 17%. By maintaining competitive corporate rates, Singapore is able to continue luring a sizable portion of international investment. Due to Singapore’s single-tier corporate tax structure, a company’s tax payment on its income is not passed along to the shareholders (i.e. dividends are tax free).

• Singapore residents pay a flat rate of 15% to 22% in personal taxes, which range from 0% to 22% (over S$320,000) for residents and a flat rate of 15% to 22% for non-residents.

• The Goods and Services Tax (GST) was created in 1994 to strengthen taxes as a source of revenue for the government. 7% is the current GST rate. By reducing the sensitivity of revenue intake to unfavourable changes in economic conditions, the balanced combination of consumption and income taxes also increases Singapore’s fiscal position’s resilience.

• Withholding tax must be deducted on Singaporean payments of interest, royalties, rent from movable property, management and technical fees, and director’s fees made to non-residents (companies or individuals).

• The Tax year for personal taxes is the regular calendar year, from January 1 to December 31. The personal tax filing deadline is April 15. A corporation is able to select its financial year for corporate taxes. The company tax return filing deadline is November 30. Taxes are paid based on the prior year.

• There is No Capital Gains Tax in Singapore. Therefore, capital loss expenses are not allowable as deductions.

• Singapore has established more than 50 bilateral comprehensive tax treaties to help Singapore corporations lower their tax burden.

Types of Taxes in Singapore

• Income Tax – chargeable on income of individuals and companies.

• Property Tax – imposed on owners of properties based on the expected rental values of the properties.

• Estate Duty – abolished since February 15, 2008.

• Motor Vehicle Taxes – taxes, other than import duties, that are imposed on motor vehicles. These taxes are imposed to curb car ownership and road congestion.

• Customs and Excise Duties: Since Singapore is a free port, there aren’t much import or excise taxes there. Excise duties are applied largely on tobacco, petroleum products and liquors. A small number of products are also subject to import taxes. Motor vehicles, tobacco, alcohol, and petroleum items are the main targets of the taxes.

• GST (Goods and Services Tax) is a consumption tax. When money is spent on products or services, including imports, the tax is paid. In many other nations, this type of indirect tax is often referred to as Value Added Tax (VAT).

• Betting Taxes are duties on private lottery, betting & sweep-stake.

• On business and legal papers pertaining to stocks, shares, and real estate, stamp duty is charged.

• Other – The foreign worker levy and the airport passenger service charge are the two primary taxes. To control the hiring of foreign workers in Singapore, the foreign worker levy was implemented.

Singapore Tax Governing Authority

The Singaporean Income Tax Act is the main statute that controls both Corporate and Individual Taxation issues.

The Inland Revenue Department was renamed to the Inland Revenue Authority of Singapore (IRAS) in 1960. It allowed the administration and collection processes to be streamlined and better managed by combining all the major revenue collection agencies into one entity.

Additionally, IRAS has established itself as a productive tax administrator and a customer-focused tax collector.

Income tax, property tax, goods and services tax, estate duty (abolished as of 15 February 2008), betting taxes, and stamp duties are all collected by IRAS. As the Ministry of Finance’s primary tax administrator, IRAS contributes to the development of tax policy by offering advice on each policy’s technical and administrative ramifications.

IRAS also keeps a close eye on changes in the external economic and tax environment to determine where policy reviews and modifications are needed. It aims to promote a tax climate that is competitive and supports business and growth. IRAS also represents the government in tax treaty discussions, offers guidance on property assessment, and drafts tax laws, among other non-revenue generating tasks.

An overview of Singapore’s tax history

Early beginnings

Income taxes, which had been debated since before World War I, were briefly implemented to raise money for the war effort during World Wars I and II. However, the tax was controversial, and because so many people opposed its necessity, income tax remained off the table.

The need for new infrastructure and new revenue sources was underscored by the end of World War II, which rekindled interest in enacting an income tax.

Income Tax was first implemented in Singapore in 1947 by the British colonial administration. The Income Tax Act was put into effect in 1948. The Model Colonial Territories Income Tax Ordinance 1922, created at the time for British colonies, served as the model for the Act. The tax laws of Singapore, Malaysia, Australia, New Zealand, and South Africa thus have similar historical foundations.

1960s

After gaining independence in 1965, Singapore encouraged a program of swift industrialization and the development of an industrial base focused on exports in order to create prosperity and employment. Therefore, tax incentives were used in the 1960s to promote businesses that required a lot of labor. In 1967, the Economic Expansion Incentives Act was first proposed. Businesses that boosted their exports were eligible for tax exemptions of up to 90% of the increased export revenue. An industrial enterprise in the area received foreign loans, the interest on which was tax-free.

1970s

The government placed a great priority on the development of the service industry in the 1970s. The 1973 exclusion of interest on Asian dollar bonds from taxation had considerable impact on the financial sector. Shipping was also heavily encouraged. Singapore ships’ operating and chartering profits qualified for tax exemptions.

Additionally, tax incentives for urban redevelopment were implemented. Additional property taxes were gradually eliminated. Social demands of the 1970s had an impact on tax policies as well. Other tax relief measures were adopted, and contributions to the Central Provident Fund were tax deductible.

1980s

In the 1980s, as Singapore expanded, it became a more expensive location for businesses. The economy was given a makeover with the intention of increasing competition. Taxes, incentives, and policy changes were taken into consideration. A dramatic trend toward cutting both corporate and individual taxes occurred in the late 1980s. Corporate tax rates were reduced from 40% to 33% in 1987.

1990s

The tax policies underwent significant modification throughout this time. The emphasis shifted to indirect taxes, with a move toward smaller direct taxes. The Goods and Services Tax (GST) was first implemented in 1994 as a result of the trend toward indirect taxes.

All goods and services provided in Singapore are subject to this tax on domestic consumption, with the exception of financial services and real estate. The trend of lowered corporate and individual tax rates accelerated during this time.

2000 and beyond This has been the phase of innovation and entrepreneurship. To draw in foreign talent and investment, a number of measures have been and are being implemented. With further reductions, tax rates are now capped at 17% for businesses and 20% for individuals. Group relief and the one-tier corporate tax system were implemented during this time.