Expat Tax In Singapore – Expat Living In Singapore
The Republic of Singapore, one of the top five financial centers of the world, is an island country off the Malay Peninsula south of Thailand in Southeast Asia. Over sixty smaller islands surround the mainland. Even though the island is still a popular destination for US expats, currency inflation issues in recent years are affecting the cost of living in this sovereign state. Singapore nevertheless ranks with other expat “hotspots”, like Germany in Europe and China in Asia, as a country on the short list for expat destinations.
Below is our top 6 list of areas to live in Singapore for expats (in no particular order):
- China Town
- East Coast
- Little India
- Orchard Road
- Sentosa Island
- Marina Bay
These six Singaporean areas are densely populated with a mixture of Malays, Indians, and Chinese to name a few of the key cultures. The island country boasts a unique mix of Chinese and Malay flavors in its Peranakan (or Nonya) cuisine as well as four distinct languages among its people; English, Malay, Mandarin, and Tamil.
The weather is humid and categorized as a tropical rainforest with no real change in seasons. The legal system follows English common law and receives, along with Hong Kong, world-wide praise for its judicial quality.
The number of cars allowed to operate on the island is restricted due to concerns about congestion and pollution. If you are fortunate enough to slide behind the steering wheel of an automobile, remember you drive on the left side of the street!
Guide To US Expat Tax In Singapore
The Tax Samaritan country guide to US expat tax in Singapore is intended to provide a general review of the tax environment of Singapore and how that will impact your U.S. expatriate tax return as a U.S. Expat In Singapore.
As a U.S. taxpayer, all worldwide income is subject to taxation and reporting and for most expatriates you are required to file a U.S. tax return on an annual basis due on April 15 each year (June 15 if you are residing overseas on the April 15 deadline). The tax treatment for different classes of income can vary greatly from Singapore and the U.S. For example, certain benefits may be tax free or excluded from taxable income in the Singapore, but in the U.S. these benefits are likely to be non-qualified benefits that are subject to being included as taxable income in U.S. As such, there are a number of considerations related to US expat tax in Singapore and this brief article will address a few of those considerations.
Singapore Expat Income Taxes
Who Is Liable For Income Taxes In Singapore
Income for services performed in Singapore is subject to taxation. Singapore-source income from a trade, profession, business, or vocation is taxed on profits. A person is considered a Singapore tax resident for a specific “Year of Assessment” or YA if they either (1) permanently reside on the island, (2) are a Singapore Permanent Resident (SPR) with an established home, or (3) are a foreign national who has remained or worked on the island for 183 or more days in the preceding YA. A “Director of a company” is excluded from this definition and is considered a non-resident for tax purposes. Residents who receive income from sources outside the country are not subject to income tax. Foreign-source income received by non-residents are exempt from Singapore income tax. There may also be tax exemptions for foreign-source income such as dividends, foreign branch profits, and service-related income.
Tax Year In Singapore And Tax Filing And Payment Rules
A source-based, progressive tax system is levied on both Singapore-source personal and business income as well as on property. Non-Singapore source income received by individuals is tax exempt. The tax code is relatively simple because there is no capital gains tax or only a single tax rate imposed by one level of government; there are no separate local taxes. This simplified tax structure is designed to encourage capital investment and incentivize tax return filing.
People who work on the island for less than 60 days are exempt from personal income tax. Similarly, foreign professionals who reside in the country for less than 183 days are considered non-residents. Those individuals who work for a period between 61 days and 183 days are taxed at the greater of 15% or the “resident” tax rate. Property ownership is encouraged by taxes no greater than 6%. The government also has a Stamp Duty tax (relating to immovable property and intangibles like documents, mortgages, and stock shares), a casino tax, and a variety of other specialized duties (estates, private lotteries, etc.).
Various forms of “tax reliefs” such as a personal and spousal deductions are available only to “resident” tax payers. Singapore also has a 7% consumption or value added tax (VAT) on goods and services made in or imported into Singapore called the Goods and Services Tax (GST).
Singapore non-resident income is taxed at the greater of 15% or the “resident” rate. Consulting and Director fees as well as other non-resident income are taxed at a flat rate of 20%. The Inland Revenue Authority of Singapore website provides income tax tables, contact numbers, and other resources. An online “myTaxPortal” is available for reviewing the annual personal assessment.
The Year of Assessment (YA) or Singapore tax year is typically a calendar year from January 1 thru December 31. If a person resides in Singapore in the year preceding the YA, they are assessed an income tax. There are various residency exceptions that include temporary absences and what are called administrative concessions. These exclusions and exemptions need careful review before filing an expat tax return.
Expat Tax In Singapore Withholding
Withholdings are levied on non-resident individuals and companies with Singapore-source income, like royalties, interest, management fees, etc., at up to 15%. Expats are neither subject to nor allowed to make voluntary contributions to the Central Provident Fund (CPF). Expat taxation is dependent upon residency status and existing tax treaties between Singapore and the foreign nationals home country. These treaties (commonly known as Avoidance of Double Taxation Agreements or DTAs) have been written to protect expats from taxation of the same income by both Singapore and the expat’s home country. Even though Singapore has a limited tax treaty with the United States that pertains to mostly corporate taxes, most expat should have their US and Singapore-source income carefully reviewed by an international tax specialist like Tax Samaritan.
What You Need To Know About US Expat Tax In Singapore
When dealing with US expat tax in Singapore, there are a number of preferential expat tax treatments that may benefit your U.S. expatriate tax return. In fact, for many U.S. expats, the Foreign Earned Income Exclusion (IRS Form 2555) and other deductions will reduce your U.S. taxes to zero.
Some of these preferential tax treatments or benefits for US expat tax in Singapore include:
- If you are a U.S. citizen or a resident alien of the United States and you live in Singapore, your US expat tax in Singapore is based on your worldwide income and as such you must file a U.S. return for all the years that you are residing in Singapore. However, as a U.S. expat you may qualify to reduce your U.S. taxable income up to an amount of your foreign earnings that is adjusted annually for inflation ($99,200 for 2014). In addition, you can exclude or deduct certain foreign housing amounts. This is known as the Foreign Earned Income Exclusion and foreign housing exclusion .
- When it comes to your US expat tax in Singapore, most US expatriates worry about “double taxation” – paying taxes to two different countries – the U.S. and Singapore. A U.S. taxpayer working overseas in Singapore may be able to reduce U.S. taxable income and “double taxation” by claiming the Foreign Tax Credit on Form 1116. Should any foreign income not be fully offset by the foreign earned income exclusion, housing exclusion or housing deduction, the foreign tax credit paid or accrued may be used as a deduction or credit on the U.S. tax return. Taxpayers can elect to either deduct the taxes as an itemized deduction on Schedule A or claim a credit against tax. In most cases, it is to your advantage to take foreign income taxes as a tax credit.
A common but dangerous mistake is the assumption that if there are zero taxes owed with these tax benefits that a return for US expat tax in Singapore does not need to be filed. That is not true. If you are working overseas, it is likely that you meet the filing requirements to file a tax return and must do so. It is important to note that the preferential tax treatments, such as the foreign earned income exclusion and foreign tax credit are not applicable to the outcome of your tax liability until they are claimed on a filed tax return.
When faced with US expat tax in Singapore there are many tax items to consider, but the above are by far the most common preferential tax benefits. With top-notch experienced and knowledgeable expat tax preparation from Tax Samaritan, you can be assured that you are paying the minimal amount of U.S. taxes that you are legally obligated for.
Singapore Foreign Bank Account Reporting – The FBAR (FinCen Form 114)
Another important tax deadline that frequently applies to US expat tax in Singapore is in regards to the disclosure of foreign assets on the FBAR (Foreign Bank Account Report – Form 114 – formerly known as TD F 90-22.1).
The FBAR filing deadline is June 30th (or the preceding business day if June 30th falls on a weekend). Unfortunately, requesting an extension on your individual return does not extend the FBAR due date – there is no extension available for the FBAR deadline. Any reports filed after this date are considered a delinquent FBAR. In addition, the FBAR is different than many other tax forms in that it must be received by the deadline date (and not postmarked by the deadline date).
The FBAR must be filed with the Treasury Department (it is not filed with your federal income tax return) whenever you meet the FBAR filing requirements, which in a nutshell is whenever a U.S. person has a financial interest in, or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust or other type of foreign financial account (including an insurance policy with a cash value such as a whole life insurance policy) maintained with a financial institution, with an aggregate value of over $10,000 at any time during the calendar year based on the highest value of each foreign account during the tax year.
If you have bank accounts at DBS Bank, OCBC Bank, Developmental Bank of Singapore, Standard Chartered Bank, United Overseas Bank Ltd or at another bank in Singapore or any other foreign country, you may meet the filing requirement to disclosure your foreign accounts on the FBAR. Please don’t hesitate to contact Tax Samaritan to learn more about your filing requirements.
U.S. – Singapore Social Security Totalization Agreement
The United States has entered into agreements, called Totalization Agreements, with several nations for the purpose of avoiding double taxation of income with respect to social security taxes. These agreements must be taken into account when determining whether any alien is subject to the U.S. Social Security/Medicare tax, or whether any U.S. citizen or resident alien is subject to the social security taxes of a foreign country. As of this time, Singapore has not entered into a Totalization Agreement with the United States thus there is no opportunity to avoid double taxation of social security income for US expat tax in Singapore.
U.S.- Singapore Tax Treaty And Tax Relief For US Expat Tax In Singapore
The United States does not currently have a separate, comprehensive tax treaty with the Singapore. The US Internal Revenue Code offers tax credits against any Singapore income tax. See our Tax Samaritan Takeaways below for other valuable references.
Expat Tax In Singapore? Request A Tax Preparation Quote
Our goal at Tax Samaritan is to provide the best counsel, advocacy and personal service for our US expat tax in Singapore. We are not only tax preparation and representation experts, but strive to become valued business partners to American expatriates in Singapore. Tax Samaritan is committed to understanding our client’s unique needs; every tax situation is different and requires a personal approach in providing realistic and effective solutions.
Click the button below to request a Tax Preparation Quote today to get started with the preparation of your return for US expat tax in Singapore or to request a free 30-minute tax consultation.
Tax Samaritan Expat Tax In Singapore Takeaways
Please click on the hyperlinks below for additional takeaways for your expat tax in Singapore:
Inland Revenue Authority of Singapore (for tax schedules and other resources)
Major Banks in Singapore, Hawksford (for important contact numbers)
Singapore Ministry of Foreign Affairs (for important contact numbers)
Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US expat tax in Singapore and throughout the world. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.
When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts) that is experienced and knowledgeable about US expat tax in Singapore. If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).
Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals and experienced with US expat tax in Singapore. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional US expat tax in Singapore advice based on your individual needs.