Goods and services tax (GST)
GST is charged at 7% on the supply of goods and services made in Singapore by a taxable person in the course or furtherance of one's business. It was announced in the 2018 Budget that this rate would be increased to 9% sometime between 2021 and 2025.
The only exemptions from GST are prescribed financial services (including life insurance), the sale or rental of residential properties, and the import and local supply of investment precious metals (IPM). Zero-rating only applies to the export of goods and international services.
GST is also levied on import of goods, at the time of importation. However, there are reliefs available to ease the cash-flow burden of import-export traders by suspending GST at the time of importation. GST is not currently charged on import of services, although this will change from 1 January 2020 with the introduction of a reverse-charge on local businesses that make exempt supplies, and those that do not make any taxable supplies, to account for GST on the services they import. A non-registered business that imports services exceeding SGD 1 million in a year and is not entitled to full input tax credit if it were GST-registered will be required to register for GST to account for the reverse charge under the new rules. These businesses can, in turn, claim the GST accounted for as their input tax, subject to the normal rules for input tax recovery. In addition, overseas suppliers and electronic marketplace operators that make significant supplies of digital services to local consumers will be required to register for GST in Singapore.
A taxable person is one who is, or is required to be, registered for GST. GST registration is required if one's taxable turnover exceeds SGD 1 million per year. Voluntary registration is permitted if the taxable turnover is below the registration threshold, subject to conditions.
A supply of goods is made in Singapore if the goods are in Singapore at the time of supply, and a supply of services is made in Singapore if the supplier belongs in Singapore. Generally, a person belongs in Singapore if one's business establishment (including carrying on a business through a branch or agency) or fixed establishment is in Singapore.
A taxable person is allowed to credit the input GST paid on taxable purchases against the output GST chargeable on taxable supplies made. However, certain purchases are specifically denied an input GST deduction. These include supplies of goods and services such as non-business expenses, club subscription fees, family benefits, car rental expenses, motor vehicle expenses, medical expenses, and transactions involving betting, sweepstakes, lotteries, fruit machines, or games of chance.
A non-resident is not entitled to GST refunds except by appointing a resident business that is registered for GST to act on its behalf. The resident tax agent can then recover import GST paid on behalf of the non-resident business but will be required to account for output GST on any subsequent supply of the non-resident’s goods in Singapore.
Customs and excise duties
Singapore is essentially a free port with minimal import restrictions. Customs and excise duties are imposed on intoxicating liquors, tobacco products, motor vehicles, and petroleum products.
Property tax is levied annually on the annual value of houses, land, buildings, or tenements.
For residential properties, owner-occupier tax rates range from 0% to 16% and non-owner occupier tax rates range from 10% to 20%. The tax rates depend on the annual value bands.
For non-residential properties, such as commercial and industrial buildings and land, the tax rate is 10%.
Stamp duties are levied on written documents (as well as electronic instruments executed on or after 4 October 2018) relating to immovable properties, leases, and stocks and shares.
Stamp duties are typically payable by the buyer (i.e. buyer’s stamp duty or BSD); however, seller's stamp duty (SSD) and additional buyer's stamp duty (ABSD) have been introduced as measures to cool the residential property market.
There is BSD of up to 4% on the purchase price or market value, whichever is the higher. There is an ABSD of up to 30% and an SSD of up to 15% on the price or market value of the property, whichever is the higher, depending on the type of property (residential or industrial), the residency status of the buyer, the holding period of the property, and the number of properties owned.
Foreigners of certain nationalities who fall within the scope of the respective free trade agreements will be accorded the same treatment as Singaporeans.
Certain transfers of equity interest in property holding entities (PHEs) that own (directly or indirectly) primarily Singapore residential properties could attract additional conveyance duty (ACD) for buyers and sellers who are significant owners (as defined) of PHEs, as well as for a buyer who would become a significant owner after acquiring an equity interest in the PHEs. For acquisition of equity interest in a company, share duty remains payable in addition to the ACD.
Leases attract duty at 0.4% of the total rent (for leases of up to four years) or 0.4% of four times the average annual rent for the period of the lease (for leases longer than four years), but leases with average annual rents not exceeding SGD 1,000 are exempt from stamp duty.
Stocks and shares
Instruments effecting the transfer of stocks and shares are subject to stamp duty of 0.2% on the purchase price or market value of the shares transferred, whichever is the higher.
Foreign Worker Levy (FWL)
The FWL is a monthly levy that employers are liable to pay for each foreign employee (Work Permit or S Pass holders) hired. The levy rate depends on the employer’s industry and the ratio of foreigners to Singaporeans and permanent residents employed in the company.
Singapore does not have payroll withholding. When a non-Singapore citizen employee ceases employment in Singapore, leaves Singapore for an overseas posting, or leaves Singapore for a period exceeding three months, the employer needs to notify the Singapore tax authorities once the fact of cessation/departure is known to the employer, unless the employer is bearing full Singapore taxes for the employee, and withhold all monies due until tax clearance is issued. The notification must be made no later than one month prior to the date of cessation/departure, or two months from the date of cessation/departure where the employer is bearing full Singapore taxes for the employee. Non-Singapore citizen employees are also subject to tax on unexercised/unvested stock options/awards on a deemed gain basis when they cease employment or leave Singapore. As a concession, tax clearance need not be obtained in certain scenarios (see Payment of tax in the Tax administration section of the Individual tax summary for details).
Social security contributions
Central Provident Fund (CPF)
The CPF is Singapore's national pension scheme. Contributions are payable by Singapore citizens and permanent residents only. Employers and employees contribute 17% and 20%, respectively, of ordinary monthly wages, up to an income ceiling of SGD 6,000. Their respective maximum contributions are therefore SGD 1,020 and SGD 1,200. The rates are applicable to employees aged 55 years and below.
These rates also apply to additional wages (e.g. year-end bonus), up to a maximum contribution of:
- the actual additional wages if the annual ordinary wages are not more than the ordinary wage ceiling of SGD 72,000 and the total wages are not more than the maximum contribution of SGD 102,000
- the difference between the maximum contribution of SGD 102,000 and annual ordinary wages if the total wages exceed the maximum contribution of SGD 102,000 but the annual ordinary wages are not more than the ordinary wage ceiling of SGD 72,000, or
- the lower of the difference between the maximum contribution and the ordinary wage ceiling (SGD 102,000 - SGD 72,000) or the actual additional wages if annual ordinary wages exceed the ordinary wage ceiling of SGD 72,000.
Reduced rates apply for employees who are earning less than SGD 750 per month as well as for those above 55 years of age, although these rates are being gradually increased.
Foreign nationals and their employers are precluded from making CPF contributions. Foreign employees who become Singapore permanent residents, and their employers, may contribute at reduced rates for the first two years.
Supplementary Retirement Scheme (SRS)
The SRS is a voluntary scheme to encourage employees and the self-employed to save for retirement over and above their CPF savings. The maximum amount to be contributed is subject to an income cap of SGD 102,000. Employers are allowed to contribute to their employees’ SRS accounts, subject to the contribution limits below. Employees will be taxable on these employer contributions, but will be allowed corresponding tax relief.
The contribution rate caps for contributions made to the SRS scheme are as follows:
||Rate cap (%)
|Singapore citizens or permanent residents
Carbon tax at a rate of SGD 5 per tonne of carbon dioxide-equivalent (tCO2e) of emissions will be applied on the total greenhouse gas emissions of facilities that produce 25,000 or more tCO2e of emissions per year. The carbon tax will apply uniformly to all sectors, without exemption, and will take the form of a fixed-price credits-based mechanism. The first payment of the carbon tax will be in 2020, based on emissions in 2019. The tax rate will be reviewed by 2023, and there are plans to increase it to between SGD 10 and SGD 15 per tCO2e emissions by 2030.