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Taxes in Singapore
If you are a self-employed expat working in Singapore, most of the previous information on income tax still applies to you.
You count as a self-employed resident if you carry on a trade, a business, or a profession in Singapore. For example, you could be a freelance graphic designer working from home, a medical doctor with your own practice, a business consultant with a small office, etc. In this case, instead of your employment income from local sources, you have to list your gains or profits in your tax return.
Keeping Tax Records as a Self-Employed Expat
Once you have decided on self-employment in Singapore, you need to keep proper business records for purposes of accounting and taxation. Generally speaking, the accounting year is the same as the tax year, but you may choose a different twelve-month period if you wish.
During the accounting period, maintaining detailed records of your profits or losses, and your balance sheet is essential. You should be able to hand in an official statement of accounts whenever necessary.
The Business Income of Self-Employed People
The business income of a self-employed individual or a sole proprietor is treated as part of their personal income in their annual tax return. It should be listed in the form of a so-called 4-line statement. This consists of:
- business revenue
- gross profit/loss (= revenue minus cost of all goods sold, or simply the total revenue for all services rendered)
- allowable business expenses
- adjusted profit/loss (= gross profit/loss minus expenses minus capital allowances)
Allowable expenses for your business include employee costs — such as salaries, the employer’s CPF contributions, insurance for your staff — and basic costs — such as rent and utility bills, advertising costs, repair and maintenance. Capital allowances are the write-off for items that you have purchased for business reasons, like a new computer for your team assistant or an air conditioner system for the entire office.
In addition to that, self-employed people and business owners can claim certain kinds of tax relief, such as for costs related to research & development. Please ask the IRAS for further details as far as the taxation of self-employed individuals or sole proprietors in Singapore is concerned.
Other Taxes in Singapore
When filing your tax return, don’t neglect other forms of income beyond employment and business. If you rent out a property in Singapore, you will have to list the rental income too.
Moreover, there are some other kinds of taxes in Singapore, too. While the government does not tax gifts, inheritance, or wealth, these taxes and duties include:
- tax on property in Singapore
- stamp duty when buying, selling, or leasing property
- stamp duty when purchasing stock and shares
Tax Clearance for Temporary Residents
What if you want to change employers in Singapore or leave the country forever? How will this affect your duties as a taxpayer?
If you are a foreign employee, you may have to start the so-called tax clearance process. This usually applies in the following cases:
- You want to move away from Singapore.
- You are going to live outside Singapore for more than three months in a row.
- Your contract expires and is not renewed.
- You are laid off.
- You give up your job in Singapore.
- You change companies within Singapore.
Once you hand in your notice or receive it, the employer has to inform the IRAS and temporarily withhold all payment. Best check if they have filed the form to avoid any potential trouble with the IRAS!
The tax clearance procedure normally takes one to three weeks. Then you receive a bill of assessment from the IRAS. Your liabilities are settled out of the withheld payment. If your outstanding tax liabilities should be higher, you have to pay the difference via cash or cashier’s order at a Singapore post office.
If you are a self-employed expat, you only need to notify the IRAS if you intend to cease business and leave the country. Contact them at least one month before your planned departure and send them your 4-line statement, as well as all income sources for the tax year so far. You will get a notice of assessment within a couple of weeks, so you can settle your tax liabilities before you go.
Tax Relief Treaties
Singapore has entered into so-called Double Tax Avoidance Agreements (DTAs) with a variety of other nations. These treaties are supposed to reduce or nullify the double taxation of the same income in two different countries.
At the moment, Singapore has bilateral tax treaties with over 60 states, including Australia, Canada, China, India, Indonesia, Japan, Malaysia, Mexico, New Zealand, Russia, South Korea, Switzerland, the UAE, the US, and most EU member states. Treaties with another dozen countries have been signed, but not yet ratified.
You can find the complete list of countries and the text of these tax relief treaties on the IRAS website. To see how the provisions of a specific DTA affect your personal tax situation, please ask the IRAS or an international tax consultant for further advice.
We do our best to keep this article up to date. However, we cannot guarantee that the information provided is always current or complete.