A Guide to Income Tax for Foreign Company Owners and Directors in Singapore
Company owners plan to pay their corporate tax to IRAS. If you run a business, you should also pay all its taxes on time. In addition, as an individual taxpayer, you need to pay personal income tax. If you are busy, a reliable provider of taxation services Singapore can help you with it.
For the tax residents of Singapore, calculating and paying personal income tax is a straightforward task. They can use progressive rates to calculate their tax on their income earned in Singapore. However, for the non-resident foreign company owners and directors, taxation is a bit difficult topic. They need info on whether they need to pay income tax. And if they do, whether to use the flat tax rate or the resident’s progressive rates.
Do Sole Proprietorships/ Partnerships Pay Corporate Tax?
Singaporean sole proprietorships and partnerships do not pay any corporate income tax. As they are not incorporated, they are treated as business firms.
Sole-proprietors and partners are treated as self-employed individuals. Their income from their businesses is considered their personal income. They have to pay personal income tax on it.
If you are such a self-employed person, you have to report your income to the Inland Revenue Authority of Singapore (IRAS). There is an easy way for you to do so. You can use the Pre-filling of Self-Employed Income scheme.
Afterwards, you can visit myTax Portal and review your prefilled tax information. You will find it under Income => Deductions and Reliefs statement (IDRS).
Income Tax for Company Directors in Singapore
As a director, you are an employee of the company you run. You have to pay personal income tax on your gross salary.
A reliable provider of taxation services Singapore can help you fill and file Form IR8A with IRAS. In addition, they will help you with Appendix 8A to account for the employee benefits; allowances, expenses for accommodation, company car, Etc.
To do so, you will need to provide the following information:
- Place of Residence provided by Employer
- Period of occupation (No. of days)
- Number of employee(s) sharing the premises
- Annual Value (AV) of Premises for the period
- Value of Furniture & Fitting
- Rent paid by the employer
- Total Taxable Value of Place of Residence
- Utilities/Telephone/Pager/Suitcase/Golf Bag & Accessories/Camera/Electronic Gadgets
- Driver/Servant / Gardener / Upkeep of Compound
- Taxable Value of Hotel Accommodation
- Cost of home leave passages and incidental benefits
- Interest payment by the employer on behalf of an employee
- Insurance premiums paid by the employer
- Free or subsidised holidays
- Educational expenses
- Fees and annual subscription to social or recreational clubs
- Gains from assets
- The full cost of motor vehicles given to the employee
Is Corporate Income Tax Calculated on Net or Gross Income?
Subtracting allowable deductions from your business’ gross income, gives you the actual corporate tax amount you need to pay.
Accounting Period for a Singapore Company
As per the definition, an accounting period is any period used by a company for its financial reporting. You must report its financial transactions incurred between the start and end of the period.
It is why you need to regularly update your books of accounts to record your business’ transactions. You also need to maintain your receipts, invoices, vouchers, and other documents.
Generally, a company’s accounting period lasts 12 months. And at its end, many owners hire a provider of accounting services in Singapore to prepare the statement of accounts. Doing so gets you ready-made profit and loss accounts and the balance sheet.
There are benefits of hiring a bookkeeping and accounting services. You get:
- To strike off a non-core task from your to-do list
- To use saved time and resources to accomplish core goals and grow your business
- Access to experts who take care of your books as per the SFRS
- To be free of stress, as you do not have to worry about your compliance with the statutory norms
Only Income Earned in Singapore is Taxed
Singapore has a territorial-based taxation system, and hence, income earned locally is taxed. Income earned from outside of Singapore is taxed only if:
- You transfer it to Singapore through partnerships, Or
- As part of your job in a Singapore company, you must travel overseas
Personal Income Tax for a Company Director
Your provider of taxation services Singapore can assist in determining your tax residency. The personal income tax rates applicable to you depend on your income.
As a company director in Singapore, your tax residency depends on the length of your work stay. You would be a Singapore tax resident if you;
- Have worked or stayed in Singapore for at least 183 days in a calendar year; Or
- Have worked for 3 consecutive years in Singapore; Or
- Have worked for a minimum of two calendar years with a stay of at least 183 days
Resident company directors must pay personal income tax using the appropriate progressive tax rate for their chargeable income.
On the other hand, foreign Non-Resident company directors have to pay their income tax using a flat tax rate of 22% or use an appropriate progressive tax rate to yield a higher tax amount.
Personal Income Tax Rate Table
As a tax resident company director, you should use appropriate tax rate from the table below.
| New Tax Structure with Effect From Year of Assessment 2017 | |||
| Chargeable Income ($) | Tax Rate (%) | Gross Tax Payable ($) | |
| On the first On the next | 20,000 | 0 | 0 |
| On the first On the next | 30,000 | – | 200 |
| On the first On the next | 40,000 | – | 550 |
| On the first On the next | 80,000 | – | 3,350 |
| On the first On the next | 120,000 | – | 7,950 |
| On the first On the next | 160,000 | – | 13,950 |
| On the first On the next | 200,000 | – | 21,150 |
| On the first On the next | 240,000 | – | 28,750 |
| On the first On the next | 280,000 | – | 36,550 |
| On the first In excess of | 320,000 | – | 44,550 |
How and When To File Your Singapore Taxes?
Personal Income Tax Returns Filing
If your personal annual income is S$22,000 or above, you will need to file a personal income tax return by the 15 th of April (paper) or 18 April (e-filing). You also need to declare zero income by filling tax form.
Your taxation services Singapore can assist you in filing your income tax returns online or by mail. Use the appropriate form listed below:
- As a tax resident individual, fill out Form B1
- As a self-employed fill out Form B
- As a non-resident individual, fill out Form M
Afterwards, you will get a Notice of Assessment or tax bill from May to September indicating your tax amount. Pay it within 30 days of receiving notice.
How to Pay Your Taxes in Singapore?
GIRO is the preferred method of payment in Singapore. You can use GIRO to pay your taxes via:
- myTax Portal
- Internet Banking
- Electronic Payment
- Credit card
- Telegraphic Transfer from overseas
If you are a multi-tasking business owner, you need assistance from an experienced provider of taxation services Singapore. SBS Consulting Pte Ltd is a Singaporean registered filing agent. We will ensure that you are always on top of your corporate tax requirements and other tax obligations. It will give you enough time to run and expand your business to the next level.
