Singapore has been the business hub of Asia, the best leverage of the Seaports and the comprehensive business administration policies have been mainly responsible for giving Singapore the shape for which it’s known today. Singapore soon after identifying the potential of its soil came into action and created the Income Tax Department in 1947 to administer the Income Tax Ordinance to better govern the businesses and economy.
Things got refined and amended with time and the assessment of tax was initiated in November 1948. About 40,000 individual tax returns and 1,000 corporate returns were received in the first Year of Assessment (YA) and the total tax collected for the period 1 January 1948 to 31 December 1949 was around $33.2 million. Then right after the formation of self-government in 1959, the Inland Revenue Department was also formed in 1960 when until then several revenues were administered and collected by individual agencies, they were gathered together to form one agency.
After the Singapore independence on 9 August 1965, many significant amendments were incorporated to the Income Tax Act, which got implemented on 1 January 1966. Later until 1970 12 different Acts came under the Department’s purview and in this year only the first local Commissioner, Mr Hsu Tse-Kwang was appointed.
Then after 1970 substantial resources were identified for the staff training. In 1972, Property tax billing and collection also got computerised. What came after, how the whole taxation system evolved in Singapore, is explained below with a comprehensive timeline.
Incorporation of IRAS
The Inland Revenue Authority of Singapore (IRAS) was formed by legislation as a statutory board under the Ministry of Finance on 1 September 1992. Sooner, IRAS was then incorporated by the Inland Revenue Authority of Singapore Act to carry forward the operations previously conducted under the Inland Revenue Department.
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This transaction provided IRAS the autonomy and range of powers which allowed them flexibility to operate their personnel and financial functions and resources for faster growth and high success rates. In Singapore taxation history this transformation is largely considered as a change which was the leap in achieving success while serving the nation with better tax administration.
Timeline of Taxation in Singapore
Below, I will take back you to history, stopping on some important years which got some prominent announcements and amendments in taxation in Singapore;
2024
IRAS took over the administration of the Enterprise Innovation Scheme. Introduced policies on better engagement schemes for businesses for research and development, innovation and skill development programs for YA 2024 to YA 2028.
IRAS partners with DBS bank for expansion of the eGIRO service on myTax Portal which targets corporate taxpayers and increases the number of participating banks from two to seven for eGIRO applications from the individual taxpayers. GST rate was also raised to 9%.
2023
GST rate raised to 8% and the GST regime for the cross-border vendor registration also amended for the inclusion of business-to-consumer supplies of Low Value Goods and imported non-digital services.
2020
IRAS started the Jobs Support Scheme, the Foreign Worker Levy rebate, Government cash grant for rental relief in order to support businesses after the COVID-19 pandemic.
PayNow QR was introduced at myTax Portal as a convenience for taxpayers while paying their taxes. Form C-S (Lite) is introduced for businesses with annual revenue of ≤$200,000 requiring them to complete only six essential fields.
Corporate taxation
| Rates | |
| Corporate income tax rate | 17% |
| Branch tax rate | 17% |
| Capital gains tax rate | 0% |
Compliance for corporations
Tax year: The tax year (or YA) generally is the calendar year, although an organisation is required to file its tax return as per the results of its preceding financial year.
Consolidated returns: Consolidated returns are not permitted, every organisation is required to file a separate report for corporate income tax return, unless they get a grant for waiver.
Filing and payment: Organisation must submit their approximated chargeable income to the IRAS within three months, starting from the end of their financial year.
Penalties: Penalties will be levied on late filing of returns or for failure to file returns, and also in case of the late payment or nonpayment of tax.
Rulings: A taxpayer can raise a request for an advance ruling from the IRAS on the tax consequences of a specific transaction or arrangement.
Individual taxation
| Rates | |||
| Resident individual income tax rate | Chargeable income (SGD) | Rate | Cumulative tax payable
(SGD) |
| First 20,000 | 0% | 0 | |
| Next 10,000 | 2% | ||
| First 30,000 | 200 | ||
| Next 10,000 | 3.5% | ||
| First 40,000 | 550 | ||
| Next 40,000 | 7% | ||
| First 80,000 | 3,350 | ||
| Next 40,000 | 11.5% | ||
| First 120,000 | 7,950 | ||
| Next 40,000 | 15% | ||
| First 160,000 | 13,950 | ||
| Next 40,000 | 18% | ||
| First 200,000 | 21,150 | ||
| Next 40,000 | 19% | ||
| First 240,000 | 28,750 | ||
| Next 40,000 | 19.5% | ||
| First 280,000 | 36,550 | ||
| Next 40,000 | 20% | ||
| First 320,000 | 44,550 | ||
| Next 180,000 | 22% | ||
| First 500,000 | 84,150 | ||
| Next 500,000 | 23% | ||
| First 1,000,000 | 199,150 | ||
| Over 1,000,000 | 24% |
| Nonresident individual income tax rate | Higher of (i) flat rate of 15% with no personal reliefs or (ii) progressive rates as for residents with reliefs (for employment income) and 24% (for
other income) |
| Capital gains tax rate | 0% |
Compliance For Individuals
Below I have also explained some of the key factors of Singapore taxation regime for the individuals;
Tax year: The tax year is the calendar year.
Filing status: Each individual which also implies to the married couples living together, is required to file a timely and separate tax return.
Filing and payment: It’s required to file a Singapore tax return as per the income from the preceding year by 15 April of the following year, or 18 April if filed digitally.
Penalties: Penalties levy for late filing of returns or failure to file returns, and also for the late payment or nonpayment of tax.
Rulings: A request can be raised for an advance ruling from the IRAS on the tax consequences of a specific transaction or arrangement.
Withholding tax
| Rates | ||||
| Type of payment | Residents | Nonresidents | ||
| Company | Individual | Company | Individual | |
| Dividends | 0% | 0% | 0% | 0% |
| Interest | 0% | 0% | 0%/15%/17% | 0%/15%/24% |
| Royalties | 0% | 0% | 10%/17% | 10%/24% |
Goods and services tax
| Rates | |
| Standard rate | 9% |
| Reduced rate | 0% |
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Taxable transactions: Singapore also imposes GST, which is the same as the European-style VAT, on the supply of most services and goods, and on all goods imported into Singapore unless the goods are imported through an import GST exempt or relief.
Rates: The standard rate is 9%. A zero rate also applies to international services and exports of goods.
Conclusion
Singapore taxation schemes and policies are evolving ever since the IRAS was formed. The continuous evolution of any such schemes in any nation simply signifies how much the administration body is aware of the prevailing times and how quickly they adapt to the changes to better facilitate the residence companies and the individual taxpayers. There are nations in Asia, which don’t have bills/policies/convencies in place for any such amendments in crucial policies like taxes, which is a prominent factor in any nation’s economic backbone.
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