Taxability of Income from Overseas Employment and from Employment in Singapore for Foreign Employers
Updated: Jan 31, 2022
When you work in Singapore for a foreign employer, your income earned from working in Singapore for foreign employers is subject to tax in Singapore.
Foreign employers include representative offices registered with Enterprise Singapore and other entities not registered in Singapore. Foreign employers are considered non-resident employers for tax purposes.
Income to be Assessed
(1) Employment exercised in Singapore for not more than 60 days in a calendar year
If you are a non-resident and exercise employment here for 60 days or less in a calendar year, you will be exempted from tax on your income here. This rule does not apply if your stay covers three continuous years or more.
(2) Employment exercised in Singapore for 61 to 182 days in a calendar year
If you do not fall under (1) and stay or work in Singapore for 61 to 182 days in a calendar year, you will be regarded as a non-resident. Your employment income will be taxed at either a flat 15% (no personal reliefs would be granted) or progressive resident rates for individuals, whichever gives rise to a higher tax.
(3) Employment exercised in Singapore for 183 days or more in a calendar year
If you stay or work in Singapore for 183 days or more in a calendar year, you will be regarded as a tax resident. Your employment income, after deduction of tax reliefs, will be taxed at progressive resident rates for individuals.
(4) Stay or Work in Singapore for Three Consecutive Years
If you stay or work in Singapore for three consecutive years, your income for all years will be taxed at resident rates for individuals.
Total Days of Employment in Singapore
For an employee who is based in Singapore, the number of days of employment in Singapore includes weekends and public holidays. In addition, any absences from Singapore that are temporary (e.g. overseas vacation leave) or incidental to your employment (e.g. business trips) will also be included in the count of total days of employment in Singapore.
Filing and Paying Income Tax
You need to declare the taxable overseas income under 'employment income' in your tax return. Income that is taxable includes salary, bonus, allowances, honorarium, per diem, accommodation, leave passages, and value of any benefits-in-kind (e.g. food, transport) provided to you by your employer.
The income tax filing takes place during Mar to Apr each year.
The foreign employer should prepare the Form IR8A and related appendices for you by 1 March each year. You have to file your tax return by 15 April each year.
After you have filed your tax return, you will receive a tax bill (Notice of Assessment). You must pay your tax within one month from the date of the tax bill. Payment by GIRO is not applicable for employees of foreign employers.
Letter of Guarantee (LOG) Requirement
A non-Singapore citizen is required to forward a Letter of Guarantee from a local bank or an established limited company in Singapore, to cover the estimated tax payable for the coming Year of Assessment.
Please note the following:
· The Letter of Guarantee issued by a Representative Office is not acceptable.
· The Letter of Guarantee has to be submitted to IRAS on a yearly basis.
· In the absence of the Letter of Guarantee, an advance assessment will be issued to you and you are required to settle your tax in full.
· You are still required to file the income tax return even if you have submitted the LOG or if an advance assessment has been issued to you.
· The letter of guarantee has to be signed by an authorized personnel of the Company.
Tax Clearance Obligations
Your employer will have to seek Tax Clearance when you cease employment in Singapore. Your employer should complete the Form IR21 at least one month before you cease employment or leave Singapore.
All taxes must be paid before you leave Singapore.
You can claim for exemption from Singapore income tax in respect of Dependent Personal Services rendered in Singapore under Exemption under Avoidance of Double Taxation Agreement.
If you are contracted to be based overseas to render your full employment services wholly outside Singapore, you are not liable to tax in Singapore as your employment income is sourced outside Singapore.
It does not matter where and how you are being paid. Your employer will not need to prepare the Form IR8A for you to file your tax in Singapore.
If you have any enquiries or need clarification, please contact us.