The tax year in Singapore is the calendar year. An individual’s income from a preceding calendar year is assessed to tax in the following calendar year (i.e. year of assessment).
Each taxpayer is required to make an annual return of income and of such particulars as may be required to determine the personal allowances due. Spouses receive separate returns and those electing to transfer qualifying deductions and rental deficits will need to elect for the transfer on a year by year basis (see Spouses in the Deductions section for details of the new rules for transfers of deductions between spouses). The tax return must be filed on a calendar-year basis and must be submitted by 15 April. If filed electronically, the deadline is 18 April.
Payment of tax
The tax assessed is payable within one month of the date of the assessment whether or not a notice of objection to the assessment has been lodged with the tax authorities. The notice of objection must be lodged within 30 days of the date of the notice of assessment, failing which the assessment will be treated as final.
In the case of an employee, the tax authorities will, upon application, generally allow the payment of tax by monthly instalments with no interest, using the Interbank GIRO system (an interbank fund transfer system).
Clearance for foreigners
Singapore does not have payroll withholding. When a foreign citizen employee ceases employment in Singapore or leaves Singapore for a period exceeding three months or on an overseas posting, the employer needs to notify the Singapore tax authorities and withhold all monies due until tax clearance is issued (unless the Singapore taxes are fully borne by the employer). The notification must be made no later than one month prior to the date of cessation/departure. Foreigners 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 the following scenarios:
- The employee is a Singapore permanent resident who is not leaving Singapore permanently. The employer should obtain a Letter of Undertaking from the employee stating that the employee has no intention to leave Singapore permanently after cessation of employment with the company. This administrative concession does not apply to overseas postings.
- The employee is a non-Singapore citizen who:
- worked for 60 days or less in a calendar year (this excludes company directors and public entertainers)
- worked for 183 days or more within a calendar year and earned less than SGD 21,000 annually
- entered Singapore on or after 1 January 2007 and worked for 183 days or more within a continuous period straddling two years and earned less than SGD 21,000 annually (this excludes company directors and public entertainers)
- worked for three continuous years or more and earned less than SGD 21,000 annually
- transferred to another company in Singapore due to a company merger, a takeover, or restructuring or posting within the same group of companies, or
- is away from Singapore for three to six months for training, business purposes, or overseas posting incidental to one's Singapore employment (subject to conditions).
Tax audit process
The tax authority is the Inland Revenue Authority of Singapore (IRAS). It adopts a risk-based approach to identifying compliance risk, with a focus on improving the behaviour of taxpayers who pose a higher risk of non-compliance. The Singapore tax authorities also prioritise and tailor specific compliance programmes that aim to identify taxpayers who have made mistakes in their tax returns, create an audit presence in the community to deter non-compliance by other taxpayers, educate taxpayers on their tax obligations and how to comply with these, and identifying areas of tax law, policies, and processes where the tax system can be simplified.
Statute of limitations
The statute of limitations is four years from the year of assessment. It does not apply where there has been fraud or wilful default by the taxpayer.
Topics of focus for tax authorities
The tax authorities are focused on self-employed taxpayers, who can include doctors, dentists, lawyers, accountants, consultants, commission agents, private tutors, renovation contractors, and bloggers.
Areas of focus include:
- Timely filing of income tax returns.
- Under reporting of revenue and wrongful claims of purchases/expenses by cash-based industries.
- Arrangements that constitute tax avoidance.
- Reconciliation of income declaration with assets purchased.