If you’re a taxpayer in Singapore, you’re subject to the Singapore Income Tax Act. The Act was introduced in 1947 and has been revised several times since then to reflect changes in the tax system. The Inland Revenue Authority of Singapore (IRAS) is responsible for enforcing the Act and ensuring that taxpayers comply with its provisions.
The Income Tax Act provides the framework for the taxation of income in Singapore. It sets out the rules for determining which types of income are taxable and which are exempt, as well as the rates of tax that apply. The Act also establishes the procedures for filing tax returns and paying tax, and provides for penalties and other consequences for non-compliance.
When it comes to income tax in Singapore, there are a few key things you need to know. In this section, we’ll go over the scope of taxation, tax residency and rates, basis period and year of assessment, and the Income Tax Act 1947 and its amendments.
The scope of taxation in Singapore includes both corporate and personal income. If you’re a tax resident in Singapore, you’ll be taxed on all income earned in the country as well as any foreign income that is received in Singapore. Non-residents, on the other hand, are only taxed on income earned in Singapore.
To determine your tax residency status, you need to look at a few key factors such as the number of days you’ve spent in Singapore, as well as your employment and family ties in the country. The tax rates for residents range from 0% to 22%, while non-residents are taxed at a flat rate of 15%.
The basis period is the period of time for which income is assessed. In Singapore, the basis period is generally the financial year ending in the year of assessment. The year of assessment is the year in which the tax is calculated and paid. For example, if your basis period is the financial year ending on 31 December 2023, your year of assessment would be 2024.
The Income Tax Act 1947 is the primary legislation governing income tax in Singapore. The act has undergone periodic reviews and amendments over the years, with the most recent being the Income Tax (Amendment) Act 2021. The legislative effect of these changes is that they impact the taxable income of individuals and companies, as well as the tax returns that need to be filed.
Overall, the income tax system in Singapore is designed to be fair and straightforward. With the recent Budget 2021 tax changes, there have been some updates to the system, so it’s important to stay up-to-date on any tax changes that may impact you or your company.
As a taxpayer in Singapore, it is important to comply with the Income Tax Act and related regulations. Failure to comply may result in penalties and disputes. Here are some important things to keep in mind regarding tax compliance and procedures.
To comply with the Income Tax Act, you are required to file your tax returns on time. The Comptroller of Income Tax may issue notices to remind you of your filing obligations. The deadline for filing tax returns is usually April 15th of the year following the assessment year. You can file your tax returns online using the IRAS’ electronic service.
The Income Tax Act provides for various deductions and allowances that you may be eligible for. For example, you may be eligible for capital allowances if you have incurred capital expenditure in the course of your trade or business. You may also be eligible for deductions for expenses incurred in the production of income. It is important to keep proper records of your expenses and income to ensure that you can claim the appropriate deductions and allowances.
The Income Tax Act allows for the use of electronic records and services. You can keep your records electronically and use the IRAS’ electronic services to file your tax returns and make payments. To use the electronic services, you will need to obtain an authentication code from the IRAS.
If you fail to comply with the Income Tax Act, you may be subject to penalties. For example, if you fail to file your tax returns on time, you may be subject to a penalty of up to 5% of the tax assessed. If you disagree with the assessment of your tax liability, you may dispute the assessment. You can do this by filing an objection with the Comptroller of Income Tax.
Remember to keep proper records of your income and expenses, and file your tax returns on time to comply with the Income Tax Act. If you have any questions or concerns, you may wish to consult an accountant or advocate and solicitor who is familiar with tax law.
Note: This information is based on the Income Tax Act, Property Tax Act, and related regulations as of the date of publication. The Ministry of Finance (MOF) and the Inland Revenue Authority of Singapore (IRAS) may update or change the rules and regulations from time to time.
Section 13 of the Singapore Income Tax Act allows certain approved companies to enjoy tax exemptions or deductions for specific activities. For example, companies approved under Section 13O can receive tax deductions for donations made to approved institutions or organizations. Meanwhile, companies approved under Section 13X can enjoy tax exemption for foreign-sourced income.
Section 10L of the Singapore Income Tax Act provides tax exemptions for certain income streams, such as gains from the sale of shares. This section aims to encourage investment in Singapore by reducing the tax burden on investors and entrepreneurs.
Foreigners who work in Singapore are subject to income tax, but the rules differ depending on their residency status and the duration of their stay. Generally, foreigners who stay in Singapore for less than 183 days are only taxed on income earned in Singapore, while those who stay longer may be taxed on their worldwide income.
Section 15 of the Singapore Income Tax Act allows the Inland Revenue Authority of Singapore (IRAS) to conduct tax investigations and audits to ensure compliance with the tax laws. Failure to comply with the tax laws can result in penalties and fines.
The Singapore Income Tax Act was last revised on 1 December 2021, with changes including updates to tax rates, rebates, and deductions. The revisions also introduced new tax incentives for specific industries and activities, such as the Digital Services Tax for online service providers.
The Goods and Services Tax (GST) Act is a separate tax law that governs the collection of GST in Singapore. While the GST is not directly related to the Income Tax Act, businesses that are registered for GST must file both GST returns and income tax returns.
