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Individual income tax, corporate tax, goods and service tax and property tax are some of the different types of taxes in Singapore. One of the significant objectives of these taxes is to finance public goods and services in Singapore.
Individual Income Tax in Singapore
Individual income tax is imposed on the personal income of the individual. In most of the cases, the individual income tax is levied on the total income of the individual. The amount of payable individual income tax, depends on his resident status in Singapore. At the time of assessing individual income tax, the Government of Singapore considers two factors, which are as follows:
- Tax resident or non-resident status in Singapore
- The amount of earned income by the individual
Resident Status: Singapore
Resident Individual: An individual will be treated as a tax resident in Singapore, if he has been staying in Singapore for not less than 183 days in a calender year. For being a tax resident, the government of Singapore will impose tax on the income earned by the individual in Singapore. The government of Singapore also imposes tax on the individual's overseas income that is brought in Singapore. The individual will also get personal reliefs.
Not Ordinarily Resident (NOR): A person will be treated as a not ordinarily resident, if he is a resident of Singapore for a specific tax assessment year and concurrently, he is not a resident of Singapore for 3 successive years of tax assessment, immediately before that specific year of tax assessment.
Once an individual got the status of Not Ordinarily Resident, he will be eligible of enjoying tax exemptions on social security plans, employer's contribution and non-compulsory overseas pension fund.
An individual in Singapore will be regarded as a non-resident individual, if he has been staying in Singapore for not more than 182 days in a calender year. As a non-resident, an individual will be taxed on all his income earned in Singapore. The individual will not get the benefit of personal reliefs.
A non-resident must pay income tax on his income that has source in Singapore. Under Withhold Tax law, an individual has the legal obligation to hold back a percentage of the payment he makes. The withhold amount need to be sent back to the Comptroller of Income Tax by the 15th of the following month.
Some of the major types of payments subject to Withholding Tax include royalties, interest, and gains from real property transaction.
The corporate tax is imposed on the profit of a company in Singapore. Most of the time, corporate income tax is imposed on the net income of a company. Net income is the difference between total receipts, expenses and additional reduction in the book value of an asset. A company will be taxed if it generates income in Singapore. The company will also be taxed, in the event the company generates income from overseas but receives it in Singapore. The government of Singapore follows a one-tier system of levying corporate tax on the companies operating business in Singapore.
Property tax is levied on the unmovable properties like land and buildings. The amount of tax payable is measured on the basis of the percentage (tax rate) of the annual value of the property. All property owners in Singapore are subject to Property Tax.
Goods and Services Tax
Goods and Service Tax (GST) is an indirect tax, as it is levied on the price of goods and services in Singapore. In Singapore, GST was introduced on 1st April, 1994 at a rate of 3 percent. On 1st July, 2007, the rate of GST in Singapore was 7 percent. The GST is imposed on all goods and services supplied in Singapore. GST is also imposed on the import of goods.