How To Pay Income Tax in Singapore: What You Need to Know

In Singapore, most of us earning an income are paying taxes as part of our contribution to the nation’s growth. Filing taxes can sometimes be complicated, but it doesn’t need to be. We’ve put together some answers to frequently asked questions to ease your yearly tax filing exercise.

Who Needs to Pay Income Tax in Singapore?

According to IRAS, “all individuals earning, deriving or receiving income in Singapore need to pay income tax every year unless specifically exempted under the Income Tax Act or by an Administrative Concession”.

Generally, as an individual, you will be required to pay tax for any particular Year of Assessment (YA) under the following circumstances:

• You derive or receive income in Singapore.
  • Income can be from a full-time job, sole proprietorship, freelance work, or investments in Singapore.
• You are working outside Singapore, with your employment status under Singapore.
• You are earning a gross income of $22,000 or more in a year; or/and
• You are a Singapore Citizen (SC) or Singapore Permanent Resident (SPR) who resides in Singapore except for temporary absences; or
• You are a Foreigner who has stayed/worked in Singapore (excludes the company director) for 183 days or more in the year preceding the YA.

What Is Taxable and What Isn’t?

Income can be taxable or non-taxable. Taxable income refers to income that is subject to taxation. Non-taxable income does not need to be taken into account during the taxation process. Below are some examples of taxable and non-taxable income.

Is Income From Multiple Sources Taxable?

Singapore’s taxation system considers income from various sources when determining your tax liabilities. This includes income from a full-time job, business activities as a sole proprietor or freelancer, and investments in Singapore. It’s important to note that even if you earn income from multiple sources, you must report and pay taxes on your total income.

You are encouraged to maintain a well-organised financial system that tracks your income from different sources separately to calculate your total taxable income at the end of the year with greater ease and accuracy.

Is Foreign Income Taxable?

Singapore adopts a territorial tax system, meaning foreign-sourced income is generally not taxable. However, there are a few exceptions:

• You receive it through partnerships based in Singapore.
• Your overseas employment is related to your Singapore employment.
• You operate a business in Singapore and transacted a related business overseas.
• You work in Singapore for a foreign employer.
• You are employed overseas on behalf of the Singapore government.

If you fall under any of the above categories, you will need to report your taxable overseas income in your Income Tax Return under relevant categories like ‘Employment Income’, ‘Trade Income’ or ‘Other Income’.

Do note that even if you are exempted from paying tax on your foreign-sourced income, there are a few essential points to consider.

Taxation in the Source Country

While Singapore doesn’t tax foreign income, it’s crucial to understand and abide by the tax regulations of the country where the income is generated. Some countries may have their own tax requirements for foreign income, which may include withholding taxes or other obligations.

Foreign Tax Credits

Singapore has Double Taxation Agreements (DTAs) with many countries to avoid double taxation of the same income. Under DTAs, you may be eligible to claim foreign tax credits in Singapore for taxes paid in the foreign country. This can help offset any taxes you’ve paid abroad. You are encouraged to maintain clear records of your foreign income and any taxes paid in the source country so that you can easily file your Singapore tax returns and claim foreign tax credits.

Are Capital Gains Taxable?

Capital gains, such as profits from the sale of investments or property, are generally not taxable in Singapore. This means that if you invest in stocks, bonds, or real estate and make a profit when selling them, you typically won’t owe capital gains tax on those gains.

However, there are exceptions. If you are involved in a business or trade of buying and selling properties, the gains may be considered income and subject to tax.

It’s worth noting that the duration in which you hold an investment can also impact its tax treatment. Some investments may be subject to Seller’s Stamp Duty (SSD) if sold within a certain holding period.

If you have to report taxable gains from the sale of property, you will need to declare them under ‘Other Income’ in your Tax Return.

How Much Income Tax Do I Need to Pay?

Income tax is generally based on one’s income bracket. Singapore’s income tax rates for resident taxpayers are progressive. This means that the higher your income, the higher your tax – currently, the highest income tax rate stands at 22%. Below is a table of personal income tax rates based on income:

Resident Tax Income [From YA 2024 Onwards]

Note: You can download an income tax calculator from the IRAS website to get a better idea of how much taxes you will need to pay.

Taxpayers can also expect tax relief. Typically a result of government programmes or policies, tax reliefs to help reduce the taxes that you have to pay. In Singapore, some common tax reliefs or deductions you may qualify for include the following:

• Parent Relief
• Child Relief
• NSman Relief
• Course Fees ReliefLife Insurance Relief
• Central Provident Fund (CPF) Relief
• Retirement Scheme (SRS) Relief
• Deduction on donations

Do note that there is a limit to the amount of tax relief you can receive – for personal income tax in Singapore, the tax relief currently stands at $80,000.

When Do I Need to File for Income Tax?

Tax can be filed from the end of the year’s first quarter, and you can do it electronically via the IRAS website from 1 March to 18 April every year. The assessment is for income earned in the preceding year. For example, in 2022, you would be filing for taxes for the income you received or derived in 2021. If you prefer paper filing, you will have to submit your completed tax form to the IRAS headquarters by 15 April. 

How Do I File Income Tax in Singapore?

There are two ways to file taxes – electronic filing and paper filing. Most taxpayers file their taxes online. Filing for income tax electronically is relatively easy:

STEP 1: Prepare the Necessary Resources

Make sure you have these ready:

• SingPass / IRAS Unique Account (IUA)
• Form IR8A (if your employer is not participating in the Auto-Inclusion Scheme)
• Particulars of your dependents (e.g. child, parent) for new relief claims
• Details of rental income from your property and other income, if any
• Business Registration Number / Partnership Tax Reference Number (for self-employed and partners only)

STEP 2: Log In to myTax Portal

Log in to myTax Portal with your SingPass / IRAS Unique Account (IUA).
Click on "Individuals" > "File Income Tax Return" and follow the instructions.

STEP 3: Key In or Verify Your Details

Key in details, such as your income, deductions and reliefs. These details will be pre-filled if your organisation participates in the Auto-Inclusion Scheme. You will simply need to verify the information.

STEP 4: Update Existing Tax Reliefs

Please include your claims if you qualify for additional or new tax reliefs (e.g., relief for a newborn child). If you previously claimed any reliefs that you no longer qualify for (e.g. course fees), you will need to remove them.

STEP 5: Declare Other Sources of Income, If Any

If necessary, declare your other sources of income (e.g. rental income).

STEP 6: Receive the Acknowledgement Receipt

You will see an acknowledgement page after successfully e-filing. Save or print a copy if you can.

You can find a more detailed process here.

For those who are unable to file taxes online, IRAS will send them the relevant paper tax return between February to March.

How Can I Pay for Income Tax in Singapore?

One of the most common questions taxpayers may have is how to pay income tax in Singapore. Most taxpayers pay their taxes via GIRO, a one-time payment or 12-month interest-free instalments. You can make a payment via electronic payment modes such as AXS, internet banking, phone banking, mobile banking (PayLah and PayNow apps) and SAM, or head to a post office to pay using NETS.

Taxpayers who face difficulties with their tax payments may apply for a longer payment plan via myTax Portal.

What Happens If I Miss the Deadline to File My Taxes?

You will incur a composition amount and may be summoned to Court for late or non-filing of taxes. Appeals for a waiver of the composition amount must be made online via myTax Portal and are subject to approval.

IRAS will send you reminders nearer to the deadline, so do try to file your taxes ahead of time. If you need more time to file your income tax return, do apply for an extension online via myTax Portal.

What Happens If I Fail to Pay My Taxes on Time?

You have one month from the date of the Notice of Assessment (NOA) to pay your taxes. Should you fail to make payment before the stipulated date, a late payment penalty of 5% will be imposed on the unpaid tax. If the tax remains unpaid 60 days after the 5% penalty was imposed, you may face an additional penalty of 1% per month. This penalty will be imposed for each month payment is not made, up to a maximum of 12% of the unpaid tax.

Appeals for waiving late payment penalties must be made online via myTax Portal and are subject to approval. Further enforcement actions will be taken to recover the taxes if they continue to remain unpaid.

If you are unable to pay the tax in full, you can apply to pay via monthly instalments via GIRO for up to 12 months, interest-free.

Filing taxes is part and parcel of adult life; it can be complex, but it gets easier once we have familiarised ourselves with the system. In general, just remember – if you are earning an income in Singapore of more than $22,000 per annum, you’ll need to pay taxes. You’ll also get reminders from IRAS via mail and text to file your taxes, so try to do it as early as you can. This way, you have ample time to seek help or rectify mistakes if necessary, as well as avoid any additional hassle or fees.

Frequently Asked Questions About Income Tax in Singapore

Why do I need to pay income tax?

Paying income tax in Singapore is a fundamental part of contributing to the nation’s growth and development. The tax revenue collected from individuals and businesses helps fund essential public services, infrastructure, and government initiatives. By paying income tax, you support the country’s economic stability, healthcare, education and various public programmes.

Additionally, income tax helps ensure a fair and equitable distribution of resources, allowing the Singapore government to provide assistance to those in need and maintain the nation’s overall well-being.

Is income tax based on gross income or net income?

Income tax in Singapore is primarily based on your net income, also known as chargeable income. To calculate your net income, deduct your allowable deductions, reliefs, and exemptions from your gross income. You will then arrive at your chargeable income, which will then be used to determine your actual tax liability.

What is the minimum salary to pay income tax in Singapore?

In Singapore, the threshold for paying income tax is currently set at an annual income of $22,000 or more. If your total annual income exceeds this threshold, you are required to file and pay income tax.

Is income tax automatically deducted?

If your employee is in the Auto-Inclusion Scheme (AIS), you will would not need to declare the submitted information when filing your own income tax returns. Otherwise, income tax is not automatically deducted from your earnings in Singapore. You are responsible for calculating, filing and paying your income tax annually. You can file taxes electronically through the myTaxPortal or opt for paper filing if preferred.