Basic Taxation Tips in Singapore|Income Tax Filing
Singapore is considered a tax haven due to the tax incentives given to foreign investors who decide to invest in the country. Taxation is a key requirement by every government as it’s what is used to develop a specific country, create a better community, environment, and a more vibrant economy. Singapore follows a territorial type of taxation where individuals and companies are mainly taxed on the income sourced in Singapore. Having knowledge of the basic taxation tips can be of great help when considering income tax filing.
Working with a reputable corporate service provider in Singapore can be quite beneficial as they are well versed with all tax related matters in Singapore. The corporate tax rate is at a flat rate of 17% and top tax marginal rate is 22% with the highest tax bracket defined as income that’s above $320,000. The fact that it doesn’t tax capital gains is another key factor that makes investing in the country to be considered as appealing to foreigners. Working with a tax expert for income tax filing makes it possible for one to benefit from eligible tax reliefs.
In Singapore foreign income is not generally taxed even if it’s remitted in Singapore for example, rent income earned from a property that’s not in Singapore is not viable for tax. However, if you have a registered company in Singapore it’s important to note that all of your trade income will be subject to tax in Singapore. Working with a reputable firm for tax filing services can greatly help with ensuring compliance. The Inland Authority of Singapore (IRAS) uses the below Singapore tax system;
Tax Residency and Tax Rates
It’s advisable that one gets to determine the status of their tax residency in Singapore as this has the potential of affecting not just the amount of tax that one gets to pay but also the types of tax exemptions and reliefs that one can claim. When working with a tax expert in Singapore to help with tax filing, you will be well versed with the various deductions that can help with lowering the tax amount that you’re likely to pay.
Tax residency is normally determined by both quantitative test which refers to one’s physical presence in Singapore and qualitative test which implies to the social and economic ties that one might be having in Singapore such as social and economic ties, permanent of stay, family ties and employment. One can either be a resident or nonresident of Singapore based on a number of issues.
One is considered a resident in Singapore if they have either stayed or worked in the country for at least 183 days within a calendar year. One is also considered a resident if they have either stayed or worked in Singapore for two continuous years or for three consecutive years continuously.
Tax Planning Tips
To effectively have a clear tax planning in place, it’s advisable that you engage a corporate service provider in Singapore. With a reputable tax expert in place, you will be able to gain from this basic taxation tips;
- You will be able to maximize the use of available tax reliefs.
- You will easily know whether you qualify for not ordinarily resident scheme and other tax benefits.
- If you’re a foreigner, you will get to know how to review your country’s double tax agreement with Singapore so as to check what income might be exempt in Singapore.
- You will also be able to know whether you qualify for the area representative scheme.
Originally published by onestop-audit.com