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Singapore Non-Resident Personal Tax Rates

This article intends to teach you all about rates of personal income tax as applicable to non residents in the island state of Singapore. In the process, you will learn about tax exemptions that are available to non residents under schemes like NOR and ARS.

Non-resident worker: Personal income tax applicable in Singapore

Any nonresident employee has to pay 15% of his gross salary. This tax is computed on his income without deducting the contribution made towards PF or expenses made for personal relief). However, in many cases, a nonresident employee is charged only as much as a resident of Singapore.

Income through consultation or as a director in Singapore

There is a rate of 20% of income on income earned from other sources if this income is not exempted. If a nonresident employee who is not a director or an entertainer works for higher than 60 days in Singapore, he is entitled to exemption on his income.

NOR scheme

This is a special scheme for employees who are not ordinarily residents of Singapore. Such individuals that fulfill the criterion of NOR scheme are treated favorably when assessed for 5 years of income tax.

  • Before qualifying under the NOR scheme, the individual in question should not have been a resident of Singapore for 3 continuous years
  • He must be employed in a Singapore company and must be a resident of the country in the year when he applies to be considered for Not Ordinarily Resident scheme.

If you fulfill the above criterions, you become eligible to enjoy tax benefits as following.

Time-apportionment benefit

You qualify for this concession if you have earned a minimum of S$160000 from employment in Singapore and have been away for more than 90 days because of business reasons. In this case you are asked to pay income tax only on that portion of your income that excludes your income as a director. Your income tax is proportionate to the time you have spent in Singapore. You are also exempt from income tax that is charged from your employer.

Tax benefit to the employer contributing to Social security scheme or overseas pension fund that is not mandatory

This benefit applies to you only if you have earned more than S$160000 from employment in Singapore. The contributions made by the employer on Overseas Pension Funds and Social Security Schemes are exempt from income tax but subject to the cap under Not Ordinarily Resident scheme. This cap is calculated on the basis of contribution made by the employer towards the provident fund of the employees according to the CPF Act and he has not claimed any deduction for this contribution.

Tax scheme for Area Representative

Income tax on an area representative is computed on the basis of total remuneration earned by him in proportion to the days of work given by him in Singapore. But he has to be prepared to pay income tax on gifts or other incentives in kind that he receives from his employer. To see whether you qualify to be treated as an area representative, check whether you fulfill these conditions.

  • You have to be working in the company of employer who is a nonresident
  • You are working in an office situated in Singapore for convenience
  • You fly in and out of Singapore frequently as part of your duties
  • Your salary is payable by your employer in foreign and not paid by your Singapore office

Even if your presence is Singapore because of your extensive travelling is restricted to less than 183 days, you are still considered a tax resident if you have been employed in Singapore for the last three years or if you have been employed for at least183 days inside Singapore in the last two years.

Contract that is dual in nature

You are taxed at the rate of 15% on the gross amount earned by you with no deduction provided for PF contribution or for personal reliefs. If you are employed by a group of companies, you may have a service contract for duties performed out of Singapore to enable you to exclude some of your earnings from the tax net. Tax authorities in Singapore raise queries on such contracts in a routine manner to be satisfied if your duties inside Singapore and out of it are genuinely separated or not. If you think that your dual contract is bona fide you should also naturally qualify under the Not Ordinarily Resident scheme.

LOG or the Letter of Guarantee

A Letter of Guarantee is required from a foreign national employed by a foreign company that does not have a registration in Singapore. This LOG is provided by a local bank or a company registered in Singapore to cover the tax liabilities of the individual in the ensuing assessment year. If there is no LOG, the individual has to pay tax in advance.

For those changing their job or leaving the country

If you are going out or changing your job inside Singapore, your employer has to clear all your outstanding taxes. This is referred to as tax clearance. Authorities assume you to have derived benefits from any stock on hand that you may have at the time of leaving the job or leaving the country.

Obtaining clearance if you are a non citizen

If you are a non citizen, you must furnish form IR21 at least a month before you cease to work inside Singapore. You have to do the same if you are going out of Singapore for a period of 3 months or more. Your employer may be fined by a maximum of S$1000 and may be made to pay your unpaid taxes if you fail to submit IR21 in time.

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