Taxes for Americans Living in Singapore
Singapore, often known as the “Lion City,” is a vibrant and dynamic hub in Southeast Asia. Its robust economy, efficient governance, and multicultural charm make it an attractive destination for expatriates, including US citizens. If you are living in Singapore or considering a move to Singapore, understanding the intricacies of the tax system is paramount.
Here at Universal Tax Professionals, we offer the most reliable US expat tax services to all US citizens living in Singapore. Below is a comprehensive guide to help Americans living in Singapore navigate its tax landscape.
Singapore's Tax System
Singapore operates on a territorial basis for taxation, which means that only income earned or derived from within Singapore is taxed. This is good news for Americans living in Singapore, as income earned outside of Singapore is not typically subject to taxation by Singaporean authorities. However, there are a few key points to note:
Tax Residency
The Inland Revenue Authority of Singapore (IRAS) determines the tax residency requirements in Singapore by considering the number of days an individual spends in the country during a calendar year. The following are the key criteria for establishing tax residency in Singapore:
183-Day Rule
If an individual remains in Singapore for 183 days or more in a calendar year, tax authorities generally consider them a tax resident for that year. These days do not necessarily need to be consecutive; they can be accumulated over the year.
3-Year Rule
If an individual stays in Singapore for at least 183 days in each of the three consecutive calendar years preceding the relevant year, they are also considered a tax resident for that relevant year.
It’s important to note that the determination of tax residency relies on the actual days of physical presence in Singapore. Arrival and departure days are counted, regardless of the purpose of the visit.
Income Tax
Singapore’s income tax rates are progressive and generally lower than many other countries. The tax rates range from 0% to 22%, with different tax brackets for residents and non-residents.
As of 2023, the tax rates for residents are as follows:
- Income up to SGD 20,000: 0%
- Income from SGD 20,001 to SGD 30,000: 2%
- Income from SGD 30,001 to SGD 40,000: 3.5%
- Income from SGD 40,001 to SGD 80,000: 7%
- Income from SGD 80,001 to SGD 120,000: 11.5%
- Income from SGD 120,001 to SGD 160,000: 15%
- Income from SGD 160,001 to SGD 200,000: 18%
- Income from SGD 200,001 to SGD 240,000: 19%
- Income from SGD 240,001 to SGD 280,000: 19.5%
- Income from SGD 280,001 to SGD 320,000: 20%
- Income from $321,000 and above is subject to 22%
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For non-residents, income earned from employment is subject to taxation at a fixed rate of 15% or based on the progressive tax rates applicable to residents, whichever results in a higher tax liability. It’s important to note that these rates can change, so it’s advisable to refer to the latest tax regulations.
Tax Deductions and Reliefs
Singapore offers various tax deductions and reliefs to ease the tax burden on individuals. These include:
Personal Reliefs
These are deductions from your taxable income and can cover areas such as employment-related expenses, education expenses, and contributions to approved charities.
Parent and Handicapped Spouse Relief
If you provide financial support to your parents or a disabled spouse, you can claim additional relief.
Foreign Tax Credit (FTC)
If you’re a resident and have paid taxes on foreign-sourced income, you may be eligible for a credit against your Singapore tax liability.
Goods and Services Tax (GST)
GST is a consumption tax similar to VAT. Singapore imposes GST on the supply of goods and services at a rate of 7%. Businesses that surpass a specific annual turnover must actively register for GST and apply the tax when providing goods and services.
Property Tax
If you own property in Singapore, you’ll be subject to property tax. The tax rate varies depending on the property type and its annual value.
Withholding Tax
For non-residents receiving certain types of income, Singapore imposes withholding tax which includes dividends, interest, royalties, and payments to entertainers or athletes. The rates can vary depending on the nature of the payment and any relevant tax treaties.
Singapore's Tax Filing Deadline
The tax year in Singapore generally follows the calendar year, from January 1st to December 31st. For most individual taxpayers, the deadline for filing your annual tax return in Singapore is April 15th of the following year. However, the exact deadline can vary based on the method of filing and whether you’re using an electronic or paper form.
When filing your tax return, you must settle any owed taxes by the deadline. You can make online payments through different methods, including bank transfers, credit cards, or mobile payment apps.
In some cases, individuals may request an extension of the tax filing deadline. These extensions are granted on a case-by-case basis and are generally only given for valid reasons, such as health issues or being out of the country during the filing period.
US Tax Deadline for Americans Living in Singapore
The US tax deadline aligns with that of Singapore, which is April 15th of the following year. However, Americans living in Singapore have an automatic extension available that allows them to file their federal tax return by June 15th. You can receive this extension without having to file any extra forms. If you need more time beyond June 15th, you can request an additional extension until October 15th by submitting IRS Form 4868.
Double Taxation of US Expats in Singapore
Singapore does not have a comprehensive bilateral tax treaty with the United States. Hence, Americans in Singapore may face the possibility of double taxation, as they are generally required to report and pay taxes on their worldwide income to the US government, and they may also be subject to taxation in Singapore. Nevertheless, utilizing the foreign-earned income exclusion provision could help alleviate the challenge of double taxation.
Americans living in Singapore may be eligible for the Foreign Earned Income Exclusion (FEIE), which allows them to exclude a certain amount of their foreign-earned income from US taxation. As of the 2022 tax year, the maximum exclusion is USD 112,000 (subject to annual adjustments for inflation). However, it’s important to note that this exclusion applies only to earned income and does not include investment income.
Financial Assets in Singapore
In Singapore, US expats who own financial assets (such as bank accounts, investment accounts, or mutual funds) may have certain reporting requirements to fulfill with the US government.
Foreign Bank Account Reporting (FBAR)
If the total aggregate value of your financial assets in Singapore exceeds $10,000 during the year, you must file FinCEN Form 114, also known as the FBAR, with the US Department of the Treasury. FBAR is a separate filing from your tax return and is due by April 15th (with a potential extension to October 15th).
Foreign Account Tax Compliance Act (FATCA) Reporting
If you have substantial financial assets (including certain foreign accounts and investments) that exceed certain thresholds, you may need to report them on IRS Form 8938, which you must file with your US income tax return. The thresholds vary based on your filing status and whether you live in the US or abroad.
Central Provident Fund (CPF)
CPF is Singapore’s social security system, encompassing retirement savings, healthcare, housing, and other benefits. Generally, only Singaporean citizens and permanent residents must contribute to CFP, and Americans working in Singapore are not obliged to do so. However, Americans living in Singapore can make voluntary contributions to CPF under certain circumstances. These voluntary contributions can offer long-term savings and potential benefits. Still, it’s crucial to understand the rules and implications before making any decisions, especially since Singapore has no totalization agreement with the US.
Many US citizens live abroad for various reasons, such as work opportunities, retirement, cultural exploration, or personal relationships. This decision can offer unique experiences and perspectives, but it also comes with important considerations, including US expat taxes.
If you have questions about US taxes as an American living abroad, feel free to contact Universal Tax Professionals.
