Income from Employment for Non-Residents in Singapore

Non-residents earning income from employment in Singapore are subject to specific tax rules under the regulations of the IRAS. Understanding these rules ensures compliance and helps non-residents manage their tax obligations effectively. This guide provides an overview of income tax for non-residents, taxable and non-taxable components, tax rates, and filing obligations based on IRAS guidelines.

Who is Considered a Non-Resident in Singapore?

An individual is considered a non-resident for tax purposes if they:

• Stay in Singapore for less than 183 days in a calendar year.
• Are in Singapore for short-term assignments, visits, or temporary work.

Non-residents are taxed differently compared to tax residents, with specific rules for employment income, director’s fees, and other earnings.

Taxable Income for Non-Residents

Non-residents are taxed on income derived from services performed in Singapore. Taxable employment income includes:

1. Basic Salary
   • Wages earned for services performed in Singapore.
2. Bonuses and Commissions
   • Variable income components such as performance bonuses and sales commissions.
3. Allowances
   • Includes housing, transport, and meal allowances provided by the employer.
4. Benefits-in-Kind
   • Non-cash benefits such as accommodation or the use of company assets.
5. Director’s Fees
   • Fees paid to non-resident directors are subject to a flat withholding tax rate.

Non-Taxable Income for Non-Residents

Certain types of income are exempt from tax for non-residents:

1. Overseas Employment Income
   • Income earned for services performed outside Singapore, provided it meets IRAS guidelines.
2. Specific Reimbursements
   • Reimbursements for business expenses incurred on behalf of the employer.
3. Short-Term Employment Income
   • Income for employment lasting 60 days or less in a calendar year is exempt, except for:
   • Directors’ fees.
   • Public entertainers.
   • Professionals such as consultants or trainers.

Tax Rates for Non-Residents

Non-residents are taxed at different rates depending on the nature of their income:

1. Employment Income
   • Taxed at a flat rate of 15% or the progressive resident tax rates, whichever results in higher tax payable.
2. Director’s Fees, Consultant Fees, and Other Income
   • Subject to a flat withholding tax rate of 22%.
3. Public Entertainers
   • Taxed at a concessionary rate of 10% on income earned in Singapore.

Filing Requirements for Non-Residents

Non-residents earning income in Singapore are required to:

1. File a Tax Return
   • File an individual income tax return (Form M) by 15 April of the following year.
2. Employer Reporting
   • Employers are required to report non-residents’ income via the Auto-Inclusion Scheme (AIS) or Form IR8A.
3. Final Tax Clearance
   • If a non-resident ceases employment in Singapore, their employer must file a tax clearance (Form IR21) at least one month before their departure.

Tax Exemptions and Reliefs for Non-Residents

Non-residents are generally not eligible for personal tax reliefs available to residents. However, they may qualify for specific exemptions, such as:

• Short-term employment exemption for income earned over a period of 60 days or less.
• DTAs: Non-residents from countries with DTAs with Singapore may benefit from reduced withholding tax rates or exemptions.

Common Mistakes to Avoid

1. Underreporting Income
   • Ensure all income derived from services performed in Singapore is reported accurately.
2. Incorrect Filing Status
   • Confirm your tax residency status to avoid filing incorrect tax returns.
3. Missed Filing Deadlines
   • Late filings can result in penalties and additional interest charges.
4. Neglecting Tax Clearance
   • Employers must file tax clearance for non-residents ceasing employment in Singapore.

How Apexia Corporate Advisory Can Help

At Apexia Corporate Advisory, we specialize in helping non-residents manage their tax obligations in Singapore. Our services include:

1. Tax Residency Assessment
   • Determine your residency status and applicable tax rates.
2. Tax Compliance Services
   • Assist with accurate reporting and filing of employment income.
3. Tax Planning and Relief Advisory
   • Explore potential exemptions and benefits under Singapore’s DTAs.
4. Tax Clearance Assistance
   • Facilitate the tax clearance process for non-residents ceasing employment.

Contact us to ensure compliance and optimize your tax obligations as a non-resident in Singapore.