Overseas Income and Offshore Income: Taxable or Not in Singapore

Income earned from overseas sources is a common consideration for many individuals residing or working in Singapore. Whether this income is taxable depends on various factors, including the nature of the income and how it is received in Singapore. The Inland Revenue Authority of Singapore (IRAS) has specific guidelines regarding the tax treatment of overseas income. This guide provides a comprehensive overview to help you understand if your overseas income is taxable and how to manage your tax obligations effectively.

What is Overseas Income?

Overseas income refers to income earned outside of Singapore. This can include:

• Salaries or wages from employment overseas.
• Rental income from properties located overseas.
• Dividends and interest from overseas investments.
• Profits from foreign business operations.

Is Overseas Income Taxable in Singapore?

In general, overseas income is not taxable in Singapore if it meets certain conditions. However, there are specific scenarios where such income becomes taxable.

Non-Taxable Overseas Income

The following types of overseas income are not taxable in Singapore:

1. Income Earned and Kept Outside Singapore:
   • Income that is earned and retained overseas and not remitted into Singapore is not subject to tax.
2. Foreign-Sourced Income Received by Non-Resident Individuals:
   • If you are a non-resident, your foreign-sourced income is not taxable, even if remitted into Singapore.
3. Certain Exemptions:
   • Foreign-sourced income received in Singapore by a tax resident individual is exempt if it falls under specific exemptions provided by IRAS.

Taxable Overseas Income

The following scenarios result in taxable overseas income:

1. Income Received in Singapore:
   • Foreign-sourced income that is remitted into Singapore may be taxable unless it qualifies for exemptions.
2. Income Deemed as Singapore-Sourced:
   • Income earned overseas but directly attributable to Singapore operations or services is taxable.

Examples of Taxable and Non-Taxable Scenarios

Scenario 1: Non-Taxable Income

• An individual earns rental income from a property in London and keeps the funds in a UK bank account without remitting them to Singapore. This income is non-taxable.

Scenario 2: Taxable Income

• A tax resident in Singapore receives dividend payments from an overseas investment that are transferred into their Singapore bank account. This income is taxable, subject to exemptions.

How to Report Overseas Income

1. For Taxable Overseas Income
   • Declare the income in your annual income tax return (Form B1) under the relevant section for foreign income.
   • Include details such as the source, amount, and nature of the income.
2. For Non-Taxable Overseas Income
   • Non-taxable income does not need to be reported. However, maintain proper documentation to support its classification in case of queries from IRAS.

Key Considerations for Overseas Income

1. Tax Residency Status:
   • Your tax residency status affects the tax treatment of overseas income. Tax residents have different obligations compared to non-residents.
2. Double Taxation Agreements (DTAs):
   • Singapore has DTAs with various countries to avoid double taxation on income earned overseas. Check if your overseas income qualifies for tax relief under a DTA.
3. Proper Documentation:
   • Maintain records of overseas income, remittances, and any taxes paid overseas for reference.

Common Mistakes to Avoid

1. Failing to Declare Taxable Income:
   • Ensure all taxable overseas income remitted to Singapore is reported in your tax return.
2. Assuming All Overseas Income is Non-Taxable:
   • Understand the conditions under which foreign-sourced income becomes taxable.
3. Ignoring DTA Benefits:
   • Utilize tax reliefs available under applicable DTAs to reduce tax liabilities.

How Apexia Corporate Advisory Can Help

Navigating the complexities of overseas income taxation can be challenging. At Apexia Corporate Advisory, we provide expert guidance to ensure compliance with IRAS regulations. Our services include:

1. Tax Advisory Services
   • Clarify the taxability of your overseas income and applicable exemptions.
2. DTA Analysis
   • Evaluate benefits under double taxation agreements to minimize tax liabilities.
3. Tax Filing Assistance
   • Ensure accurate reporting of taxable overseas income in your income tax returns.
4. Documentation Support
   • Assist in maintaining proper records for tax compliance and audits.