As an important financial and business center in the Asia-Pacific region, Singapore attracts talents and investments from all over the world with its high-quality business environment and competitive tax system. As the Singapore government launches a series of tax optimization measures in 2024, personal income tax policies will also be updated and adjusted. According to the latest data from the Singapore Bureau of Statistics, the number of foreign professionals working in Singapore continues to grow, with an increase of 15% in 2023 compared with the previous year. This makes it particularly important to accurately understand and grasp Singapore’s personal income tax policy . The following will provide a comprehensive analysis of Singapore’s personal income tax system.

Basic knowledge of Singapore personal income tax

In the Singapore tax system, an accurate understanding of taxpayer identification and tax year rules is the primary basis for compliant tax payment. According to the latest regulations of the Inland Revenue Authority of Singapore (IRAS) in 2024, the identification of taxpayer status directly affects an individual’s tax liability and tax preference qualifications.

In terms of taxpayer identification, Singapore divides taxpayers into two categories: tax residents and non-tax residents. Tax residents need to meet any of the following conditions: Singapore citizens or permanent residents usually reside in Singapore; foreigners actually live or work in Singapore for 183 days or more (continuously or cumulatively) during the determination year; or work continuously in Singapore for more than three years. According to the latest data released by IRAS, the number of foreign tax residents will increase by 18% year-on-year in 2023, reflecting Singapore’s continued attraction to international talents.

The 183-day rule is a key criterion for determining tax residency. It is worth noting that the calculation of these 183 days includes actual working days, holidays, weekends and public holidays in Singapore. For example, if a foreigner comes to Singapore to work on August 1, 2023, and continues to work until the end of 2024, although the 183 days in 2023 are less than 183 days, because he stayed in Singapore for more than 183 consecutive days across years, the foreigner will be in Singapore for more than 183 consecutive days. They will be recognized as tax residents in the year of assessment 2024 (YA2025).

In response to special circumstances, the Singapore Inland Revenue Authority has introduced more flexible policy adaptation measures in the post-epidemic period. For example, for foreigners who are forced to stay in Singapore due to epidemic prevention and control, this unexpected period of stay can be excluded from the 183-day statistics as long as sufficient evidence can be provided. This policy will continue in 2024 and be extended to other special circumstances caused by force majeure factors.

In terms of the tax year, Singapore adopts a system in which income from the previous year is taxed for the next year. Specifically, the tax year 2024 (YA2024) levies the taxpayer’s income tax for the year 2023 (January 1 to December 31, 2023). This system design allows taxpayers sufficient time to prepare tax declaration materials.

In terms of tax filing time, the deadline for personal income tax filing in 2024 is April 15, 2024 (paper filing) or April 18 (electronic filing). It is worth noting that the Singapore Inland Revenue Authority is vigorously promoting the electronic filing system. Statistics show that the electronic filing rate has reached 92% in 2023, and is expected to further increase to 95% in 2024. To encourage electronic filing, the tax bureau has provided longer filing deadlines for electronic filers.

Important time points for YA2024 include:

• March 1, 2024: Employers must complete the submission of Form IR8A (Annual Remuneration Return)
• April 1, 2024: Personal income tax filing system opens
• April 15, 2024: Paper filing deadline
• April 18, 2024: Electronic filing deadline
• May 2024: The first batch of tax bills is issued
• September 2024: Tax payment deadline

Special reminder: taxpayers who participate in the GIRO installment plan can enjoy installment tax benefits for up to 12 months. According to statistics, about 75% of taxpayers chose the GIRO payment method in 2023, and this proportion is expected to reach 80% in 2024.

For foreigners working in Singapore for the first time, it is recommended to understand these basic rules as early as possible and keep relevant supporting documents, such as entry records, employment contracts, etc., for future tax declaration. In addition, the Singapore Inland Revenue Authority also provides dedicated novice guides and online consultation services to help taxpayers better understand and fulfill their tax obligations.

The determination of tax resident status is not only related to the applicable tax rate, but also affects whether an individual can enjoy various preferential tax policies. For example, only tax residents can enjoy personal tax exemptions, deductions and other benefits, and can apply for double taxation avoidance agreements signed between Singapore and other countries (Singapore has signed such agreements with more than 90 countries and regions at present).

Scope of taxable income

In the Singapore tax system, the definition of taxable income is directly related to an individual’s tax liability. According to the latest regulations of the Inland Revenue Authority of Singapore (IRAS) in 2024, taxable income is mainly divided into three categories: employment income, business income and investment income. Let’s take a closer look at the taxation details for each type of income.

2.1 Employment income

Employment income is the main subject of personal income tax in Singapore. According to the latest statistics from IRAS, employment income accounts for approximately 85% of an individual’s total taxable income. Employment income includes:

Wages and salaries are the most basic taxable items, including basic wages, overtime pay, various allowances, etc. It is worth noting that starting from 2024, remote working allowances will also be explicitly included in the taxable scope. According to data from Singapore’s Ministry of Manpower, the median monthly income of full-time employees in Singapore has reached S$5,200 in 2023, an increase of 5.3% from 2022.

Annual bonuses (including Lunar New Year bonuses, year-end bonuses, etc.) are fully included in taxable income. IRAS stipulates that regardless of when the bonus is paid, it will be included in the year in which the bonus is actually received. For example, the 2023 bonus paid in March 2024 should be included in the taxable income in 2024.

The taxation rules for commission income will be adjusted in 2024. The new regulations require employers with monthly commissions exceeding S$1,000 to withhold, which affects about 150,000 employees in real estate brokerage, insurance agency and other industries.

The tax rules for stock options and share award plans are complex. Generally speaking, vesting proceeds are taxed upon exercise, while share awards are taxed upon release. Starting from 2024, IRAS will simplify the taxation method of cross-border employee equity incentive plans and use the time apportionment method to calculate the taxable amount.

In terms of employee benefits, some of the original tax-free benefits will be included in the scope of taxation from 2024. For example, mobile phone subsidy exceeding S$2,400 per year, transportation subsidy exceeding S$200 per month, etc. However, certain benefits remain tax-free, such as meals provided by the company, annual health examinations, etc.

2.2 Operating income

Operating income is the second largest source of taxable income in Singapore. According to the latest data, the number of self-employed and freelance workers in Singapore increased by 12% in 2023 to approximately 280,000 people.

Self-employment income is calculated using the “income minus deductible expenses” method. Starting from 2024, IRAS has simplified the bookkeeping requirements for small-scale operators (annual income does not exceed S$200,000) and launched a standardized income and expenditure record template.

Professional service income mainly involves the practice income of doctors, lawyers, accountants and other professionals. According to industry association data, the average revenue of the professional services industry will grow by 8.5% in 2023. This type of income is characterized by a wide range of professional expenses that can be deducted, including professional insurance, continuing education expenses, etc.

The taxation management of part-time income (including economic income from online platforms) is becoming increasingly strict. Starting from 2024, major online platforms (such as Grab, Foodpanda, etc.) will need to directly report the income data of service providers to IRAS. According to statistics, there will be approximately 120,000 platform economy practitioners in 2023, and it is expected to grow to 150,000 in 2024.

2.3 Investment income

There will be important updates to the taxation rules for investment income in 2024. Singapore adopts a more favorable investment income taxation policy to attract international capital inflows.

Rental income is subject to income tax, but deductions for mortgage interest, property taxes, maintenance fees and other expenses are allowed. Starting from 2024, Singapore will implement new management regulations on short-term rental income (such as Airbnb), requiring platform operators to withhold and remit taxes. Data shows that in 2023, approximately 30,000 property owners in Singapore will receive short-term rental income.

Royalty income (such as patents, copyrights, trademark royalties, etc.) is usually subject to a withholding tax of 10% of the amount received. However, if you are a tax resident, you can choose to pay tax based on your actual net income. Starting from 2024, royalties in the digital creative industry will enjoy a special preferential tax rate.

In terms of the treatment of overseas income, Singapore adopts the “territory principle”, that is, overseas income is taxed only when it is repatriated to Singapore. However, from January 1, 2024, overseas income that is substantially managed in Singapore may be taxed even if it is not repatriated. However, to avoid double taxation, Singapore has signed double taxation agreements with more than 90 countries.

Special reminder:

• Taxpayers should keep at least 5 years of income vouchers
• For mixed income, it should be calculated separately according to different income categories.
• Certain specific industries (such as online ride-hailing, online anchors, etc.) have special tax collection regulations
• It is recommended to hire a professional tax consultant to handle complex income situations

Supplementary note: The specific standards for income recognition may be adjusted as the economic situation and policies change. It is recommended to regularly pay attention to the latest information officially released by IRAS. The above content is for reference only and does not constitute professional tax advice.

Tax rate structure and calculation method

Singapore adopts a progressive tax rate system, which embodies the principle of “taxation based on capacity”. The personal income tax rate structure for 2024 (YA2025, corresponding to 2024 income) has been newly adjusted to better balance tax fairness and economic development needs.

3.1 Latest progressive tax rate table (2024 version)

The personal income tax rate ranges in Singapore in 2024 are set as follows: 0% for annual income below S$20,000, 2% for S$20,000 to S$30,000, 3.5% for S$30,000 to S$40,000, and 3.5% for S$40,000 to S$80,000. 7%, 11.5% for S$80,000 to S$120,000, and 11.5% for S$120,000 to S$160,000. 15% for S$160,000 to S$200,000, 19% for S$200,000 to S$240,000, 19.5% for S$240,000 to S$280,000, 20% for S$280,000 to S$500,000, and 19% for S$200,000 to S$240,000. 22% for S$10,000 to S$1 million, and 24% for S$1 million and above.

It is worth noting that the top marginal tax rate for high-income groups has been slightly adjusted in 2024, with the marginal tax rate for income above S$1 million increased from 23% to 24%. According to statistics, this adjustment will affect approximately 0.5% of high-income taxpayers and is expected to increase government tax revenue by approximately S$200 million.

In terms of marginal tax rates, Singapore has a unique design. Taking a taxpayer with an annual income of S$450,000 as an example, although the 20% tax rate band applies to their income, the actual average tax rate is about 17.8%. This is because the lower income portion is still taxed at a lower rate. This design not only ensures the progressivity of taxation, but also avoids a sudden increase in tax burden.

Compared with neighboring countries, Singapore’s personal income tax rate has obvious advantages. The highest tax rate is 17% in Hong Kong, 30% in Malaysia, and 35% in both Thailand and Indonesia. Singapore’s tax rate structure remains highly competitive in the region, which is also one of the important factors in attracting international talents. According to the 2023 annual report, Singapore has ranked among the top three in the tax competitiveness rankings in the Asia-Pacific region for 5 consecutive years.

3.2 Tax calculation method

The first step in the actual tax calculation process is to determine your taxable income. Taxpayers need to summarize their annual income, including employment income, operating income, investment income, etc. It is worth noting that starting from 2024, new income such as digital asset trading income will also be included in the calculation. After determining the total income, various tax exemptions need to be deducted. The standard personal allowance for 2024 is S$20,000, in addition to a spouse’s allowance of S$2,000, a child allowance of S$4,000 each, and a parental maintenance allowance of up to S$9,000.

After the tax-free deduction is completed, further deductions can be made for eligible expenditure items. These expenses include charitable donations (with a 250% super deduction), personal education expenses (capped at S$5,500), life insurance premiums (capped at S$5,000) and CPF contributions (with different caps based on age group). Through these deductions, the actual tax burden of taxpayers can be reasonably reduced.

To illustrate with a specific case, assume that a taxpayer’s annual income in 2024 is S$120,000, enjoys a standard personal exemption of S$20,000, and makes a charitable donation of S$2,000 during the year (S$5,000 is deductible). After calculation, its taxable income is S$95,000 (120,000 minus the total deduction of S$25,000), and the final tax payable is S$7,950.

In the actual collection process, taxpayers often encounter some misunderstandings. The most common method is to directly use the total income table to calculate the tax amount, ignoring the impact of tax exemptions and deductions. According to IRAS data, about 25% of taxpayers fail to take full advantage of various relief policies. Another common misunderstanding is the misunderstanding of marginal tax rates, mistakenly believing that once income enters a certain tax rate range, all income will be taxed at that rate. In fact, the tax calculation should adopt a segmented calculation method.

Temporal factors are also often overlooked. For example, charitable donations in 2024 must be completed before December 31 of that year in order to be deducted from YA’s 2025 tax. For taxpayers with an annual income of more than S$150,000, IRAS specifically recommends participating in the GIRO monthly prepayment plan, which can avoid the financial pressure caused by paying a large amount of tax at once. According to 2023 statistics, the late payment tax rate for taxpayers participating in the prepayment plan is significantly lower than that for non-participants.

IRAS provides an online tax calculator tool to facilitate taxpayers to make accurate calculations. Taxpayers are also advised to properly keep all income and deduction-related documents for at least 5 years. For special circumstances, it is recommended to seek advice from a professional tax advisor. It is worth mentioning that IRAS will launch an intelligent tax assistant system in 2024, which will help taxpayers calculate the tax payable more accurately and further optimize the tax service experience. By rationally applying various tax policies and accurate calculations, taxpayers can optimize their personal tax burden under the premise of legal compliance.

Detailed explanation of deduction items

In Singapore’s personal income tax system, rational use of various deduction policies can not only effectively reduce the tax burden, but also reflect the government’s support for family building, lifelong learning and career development. The deduction policy for 2024 continues the existing framework and makes corresponding adjustments in response to inflation and rising cost of living.

In terms of basic personal deductions, the Singapore government continues to implement comprehensive family support policies. The standard personal tax exemption remains at S$20,000. This basic deduction ensures the basic living needs of low- and middle-income people. Married people can apply for an additional spousal exemption of S$2,000, an increase of S$200 from 2023, reflecting the government’s continued support for family formation. In terms of child tax exemption, each child can receive a basic tax exemption of S$4,000. If the child is receiving higher education, an additional education tax exemption of S$3,000 can be applied for. According to 2023 data, about 85% of families with children took full advantage of this relief.

The tax exemption policy for supporting parents will be further optimized in 2024. Taxpayers who live with their parents can apply for a tax exemption of up to S$9,000. Those who do not live with their parents but provide regular support can also enjoy a tax exemption of S$5,500. This policy extends coverage to stepparents, reflecting the diversity of modern family structures. According to statistics, approximately 320,000 taxpayers applied for parental support tax exemption in 2023, and this number is expected to increase by approximately 5% in 2024.

In terms of living-related deductions, the deduction limit for life insurance premiums remains at S$5,000. The annual deductions for the Voluntary Provident Fund (SRS) are adjusted for inflation and are capped at S$15,300 for Singapore citizens and permanent residents and S$35,700 for foreigners in 2024. Charitable donations continue to enjoy a 250% tax deduction, and this policy is extended to 2026. In 2023, the total amount of charitable donations inspired by this policy will reach S$1.35 billion, a record high.

The upper limit for deduction of course fees will be increased to S$6,000 in 2024, an increase of S$500 from before. This adjustment is designed to encourage lifelong learning and upskilling. The scope of eligible courses has also been expanded, with new certification courses in emerging fields such as digital skills and artificial intelligence. According to data from the Workforce Development Agency, approximately 150,000 working people will participate in skills improvement courses through this policy support in 2023.

Employment-related deductions provide flexible deductions and exemptions based on the characteristics of different industries. In terms of professional membership fees, more emerging industry associations will be covered from 2024, such as the Digital Economy Association, Sustainable Development Professional Association, etc. The scope of employment-related expenditures has also been updated, adding new items such as telecommuting equipment expenditures and professional certification fees. According to the tax bureau’s interpretation and guidance, reasonable expenses incurred during working from home, such as network expenses, depreciation of office equipment, etc., can be applied for deductions on a proportional basis.

There are also new changes in the deduction policy for transportation expenses. Taking into account the popularity of the hybrid office model, a more flexible computing method will be used from 2024. Taxpayers can choose to claim deductions based on actual expenses or use the simplified standard deduction (up to a maximum of S$200 per month). This change greatly simplifies the declaration process and is expected to benefit approximately 450,000 employees who need to travel frequently or work across regions.

In order to help taxpayers make better use of various deduction policies, the tax bureau has launched an intelligent declaration assistant system. The system can automatically recommend applicable deductions based on taxpayers’ specific circumstances and provide preliminary tax savings estimates. In addition, the tax bureau also regularly holds online lectures to explain in detail the application conditions and procedures for various deduction policies. In 2023, through these measures, the improper declaration rate dropped by 15%, and the average tax refund processing time was shortened to 7 working days.

Note that some deductions need to be paid within the year before they can be claimed in the following year. Taxpayers are advised to plan in advance and reasonably arrange the timing of various expenditures to make full use of these preferential policies. At the same time, it is also very important to properly preserve relevant documents and supporting documents. This is not only a necessary condition for declaration, but also a basic preparation for possible tax audits.

Preferential tax policies

The Singapore government continues to provide targeted support to different groups through a comprehensive tax preferential system. While maintaining the original framework, the 2024 tax preferential policies have made a number of optimization adjustments based on social development needs, further reflecting the unity of inclusiveness and precision.

In terms of special group discounts, Singapore continues to increase support for newcomers in the workplace. Starting from 2024, young people who are employed for the first time can enjoy a special deduction of up to S$3,000 in their first year of employment. This policy benefits approximately 45,000 newcomers in the workplace. In order to alleviate the pressure caused by the structural adjustment of the job market, similar discounts are also provided to those who are over 35 years old and change jobs, and can receive a special deduction of S$2,500 in the first year. According to statistics from the Ministry of Manpower, the number of people who have successfully changed careers through this policy will reach 8,000 in 2023, an increase of 15% from 2022.

Preferential policies for retirees will be significantly improved in 2024. Taxpayers who reach the statutory retirement age (currently 63) will receive an additional S$4,000 annual tax exemption, an increase of S$500 from 2023. Retirees who continue to be employed can also enjoy an additional deduction of 50% of their income, capped at S$6,000. This policy aims to encourage active aging. According to data from the Pension Bureau, more than 25% of people of retirement age will choose to continue working in 2023.

Tax benefits for people with disabilities further expand coverage. Starting from 2024, in addition to enjoying the original basic tax exemption of S$7,500, taxpayers holding a disability assessment certificate can also apply for a medical expense deduction of up to S$12,000 based on the degree of disability. At the same time, employers who recruit disabled employees can receive an additional 200% salary cost deduction. This set of combined policies will help more than 15,000 people with disabilities achieve employment integration in 2023.

In terms of family-related discounts, preferential policies for married couples are more flexible. Dual-income families can choose to be taxed jointly, which in some cases can reduce their overall tax burden. The new “Couples Entrepreneurship Discount” added in 2024 allows both spouses to jointly deduct their personal entrepreneurial losses, with a maximum limit of S$50,000. This policy is expected to benefit approximately 2,000 entrepreneurial couples.

Preferential policies for working mothers continue to increase. The tax relief for working mothers has been increased to 20% of taxable income in 2024, with the relief cap increased to S$8,000 per child. For working mothers with children under 3 years old, an additional supplementary childcare deduction of S$3,000 can be claimed. According to statistics, approximately 380,000 working mothers will benefit from this policy in 2023, with an average tax saving of S$2,800 per person.

The preferential policy for grandparent care has been innovatively upgraded. Families who hire grandparents to care for their grandchildren under the age of three can claim a deduction for care expenses of up to S$10,000, an increase of S$2,000 from 2023. To support three generations living under one roof, families living with grandparents can also receive an additional S$3,000 family deduction. This policy will drive about 28,000 families to choose the multi-generational co-living model in 2023.

In terms of housing-related discounts, the mortgage interest exemption policy adapts to market changes. From 2024, mortgage interest payments on owner-occupied properties will be deducted up to S$30,000, an adjustment that takes into account the impact of recent interest rate increases. For first-time home buyers, there is an additional one-time tax credit of S$5,000. According to data from the Real Estate Administration, approximately 65,000 households will see their tax burden reduced through this policy in 2023.

The property tax rebate program has also been optimized. In 2024, owner-occupied properties will enjoy a 40% tax rebate on the first S$10,000 of taxable value, an increase of 5 percentage points from 2023. To encourage environmentally friendly renovations, an additional 10% property tax reduction is provided for residences that complete green building certification. This policy will promote about 12,000 households to carry out environmental protection upgrades in 2023.

The tax bureau specifically reminds that most of these preferential policies require active application, and taxpayers are advised to plan in advance through the myTax Portal system. The newly launched “Tax Preference Evaluation Tool” in 2024 can help taxpayers quickly identify applicable preferential projects. At the same time, considering the timeliness of some preferential policies, it is recommended to pay attention to policy updates released by the official channels of the tax bureau in a timely manner. According to 2023 data, about 15% of eligible taxpayers missed preferential opportunities because they failed to apply in time, suggesting that taxpayers need to increase their policy awareness and application awareness.

Application Process Guide

The Inland Revenue Authority of Singapore (IRAS) continues to optimize the tax declaration system, and the 2024 declaration process has been significantly improved in terms of digitalization and intelligence. According to the latest data released by IRAS, more than 92% of taxpayers in 2023 chose to complete declarations through online channels, an increase of 5 percentage points from 2022, reflecting that digital declarations have become a mainstream trend.

The online filing system myTax Portal has undergone a major upgrade in 2024. The new interface adopts an intuitive card-style design, integrates artificial intelligence assistance functions, and can automatically fill in commonly used information based on user historical data. Users only need to log in with Singpass, and the system can automatically import information such as employer-declared income data (IR8A), bank interest income, and dividend income. It is worth noting that starting from 2024, the system will add a digital asset income declaration module to support the standardized declaration of new income such as cryptocurrency.

The specific steps for electronic filing have also become more streamlined. First, taxpayers need to confirm the accuracy of the pre-populated personal information and income data. Secondly, supplementally declare other sources of income, such as sideline income, rental income, etc. Third, select the applicable deduction items and preferential policies, and the system will intelligently recommend potentially applicable preferential items based on the reported information. Finally, confirm the declaration information and submit it. The entire process only takes 15-20 minutes on average, which reduces the operating time by about 30% compared with 2023.

In order to solve the difficult problems encountered by taxpayers during the declaration process, IRAS will launch a 24/7 AI intelligent assistant service in 2024. This virtual assistant can handle more than 90% of common inquiries, including policy explanations, form filling guidance, etc. For complex problems that cannot be solved by the system, dedicated personnel will be transferred to follow up during working hours. During the trial run in the fourth quarter of 2023, the intelligent assistant’s problem-solving satisfaction reached 85%.

For taxpayers filing for the first time, IRAS provides a special newbie guidance package. First-time filers can learn about the entire declaration process through video tutorials, and the system will also provide interactive guidance to help novices complete the declaration step by step. It is particularly worth mentioning that starting from 2024, first-time filers can make an appointment for free one-on-one online tutoring services, where professional tax personnel will provide personalized guidance. Statistics show that the error rate of first-time filers who receive counseling is only one-third that of those who do not receive counseling.

IRAS has adopted a more flexible policy when it comes to deferred filing. If taxpayers need an extension, they can apply through the myTax Portal before the original deadline, and generally receive an automatic 30-day extension. If a longer extension is required, sufficient justification and supporting documentation will be required. In 2024, a new fast approval channel for special circumstances will be added. Approval results can be obtained within 24 hours for situations such as overseas business trips and serious illnesses. However, it should be noted that applying for extension for two consecutive years may increase the probability of tax audit.

If corrections are needed to a submitted declaration, IRAS provides a convenient correction mechanism. Taxpayers can submit a correction request through myTax Portal within two years of the error being discovered. In 2024, a “simple correction” function will be added. For small corrections with an amount change not exceeding S$5,000, the system can achieve instant approval. However, for major corrections, especially those involving omissions of income, it is recommended to proactively contact IRAS to explain the situation, which may result in a more lenient treatment. Data shows that about 75% of cases in which voluntary declarations and corrections were made in 2023 were exempted from fines.

In order to improve the quality of returns, IRAS recommends that taxpayers pay attention to the following points: First, it is recommended to start preparation as soon as possible after receiving the tax bill notification, and do not wait until the deadline is approaching. Secondly, properly keep the income vouchers and deduction-related documents throughout the year, and it is recommended to use electronic management. Third, make full use of various auxiliary tools provided by IRAS, such as tax calculators, policy query tools, etc. Finally, if you encounter special circumstances, communicate with the tax bureau in a timely manner to avoid unnecessary fines due to delays.

According to IRAS statistics, taxpayers who take these recommendations have significantly higher than average filing accuracy rates. In 2023, the proportion of taxpayers who completed their returns on time without corrections reached 88%, setting a record high. This not only improves the efficiency of collection and administration, but also prevents taxpayers from unnecessary waste of time and energy. In 2024, IRAS will continue to provide taxpayers with a more convenient and smarter filing experience through technological innovation and service optimization.

Tax planning suggestions

Under Singapore’s increasingly perfect tax system, reasonable tax planning can not only effectively reduce taxpayers’ tax burden, but also promote the optimal allocation of resources. According to the IRAS 2023 annual report, individual taxpayers can reduce their tax burden by 15-20% on average through reasonable tax planning, but the key is to master the correct methods and strictly abide by legal regulations.

In terms of income planning, the focus in 2024 is how to reasonably allocate and arrange various forms of income. For example, for taxpayers with multiple sources of income, consider converting some of their income into a more tax-friendly way. A typical example is to convert part of the cash award into retirement scheme contributions (SRS), which can achieve tax deferral and enjoy a more favorable tax rate when withdrawing. According to IRAS data, the number of taxpayers who achieved tax optimization through the SRS scheme increased by 25% in 2023, with an average tax saving of S$3,500 per person.

Deduction optimization is another important aspect. Under the 2024 policy framework, taxpayers should pay more attention to the combination effect of deduction items. For example, allocate expenses such as life insurance, medical insurance and accident insurance reasonably to ensure that each item can obtain the maximum deduction benefit. It is particularly worth noting that new digital skills training fees in 2024 will receive a 200% deduction discount, so it is recommended that working people give priority to participating in relevant courses. According to statistics, taxpayers who make full use of various deduction policies in 2023 will pay an average of S$4,200 less than taxpayers who do not plan.

In terms of time arrangement, reasonable tax planning needs to be deployed in advance. Take real estate transactions as an example. If you plan to sell an investment property, you can consider collecting the sales proceeds in installments across years, thereby spreading the taxable income over different tax years and avoiding a large one-time tax. Similarly, large charitable donations can also be considered spread out over the years to maximize the 250% tax deduction effect. IRAS recommends that taxpayers start planning major financial arrangements for the following year in the third quarter of each year to reserve sufficient time for tax planning.

However, when doing tax planning, special care needs to be taken to avoid falling into common pitfalls. The first thing is to distinguish between legal tax saving and illegal tax avoidance. In 2023, 35% of the personal tax violation cases investigated by IRAS were caused by improper understanding of tax policies. Common illegal operations include: fictitious or exaggerated deductions, artificial splitting of income, transferring income through shell companies, etc. These behaviors will not only be punished with back taxes, but serious cases may also face legal sanctions.

The fundamental difference between tax avoidance and tax saving lies in its legality and commercial substance. Tax saving is to optimize the tax burden through reasonable arrangements within the legal framework; while tax avoidance is to avoid tax obligations through artificial arrangements that violate the spirit of tax laws. The 2024 IRAS particularly emphasizes the principle of “substance over form” and requires taxpayers’ various financial arrangements to have real business purposes and economic substance.

Proper tax planning can be better understood through specific cases. For example, a professional with an annual income of S$250,000 can reduce his tax burden through the following legal arrangements: first, make fixed monthly contributions to the SRS account, with the annual total reaching the upper limit of S$15,300; second, use part of the bonus to subscribe for a lifetime subscription Take courses and get a S$6,000 course fee deduction; third, arrange your charitable donation time appropriately to make full use of the 250% tax deduction. Through these measures, the taxpayer will legally save approximately S$18,000 in tax in 2023.

Negative cases reveal the risks of improper planning. A taxpayer attempted to convert personal service income into corporate income by setting up a shell company in order to enjoy a lower corporate tax rate. This arrangement was deemed as tax avoidance by IRAS. Not only did the company pay back taxes, but it was also fined 30% of the original tax payable. This case illustrates that tax planning must be based on real business.

In order to help taxpayers conduct reasonable tax planning, IRAS launched the “Tax Health Check” service in 2024. Taxpayers can make an appointment with a professional consultant to conduct a comprehensive assessment of their personal tax situation and obtain personalized optimization suggestions. At the same time, IRAS also regularly holds tax planning lectures to explain the latest policies and typical cases. In 2023, 82% of taxpayers who participated in this type of training said that their tax planning capabilities have been significantly improved.

Effective tax planning is an ongoing process that requires taxpayers to follow up on policy changes in a timely manner and plan financial arrangements reasonably. It is recommended to regularly review personal tax status and seek professional advice before major financial decisions to ensure that tax planning is both legal and compliant and can achieve the expected tax savings. Facing an increasingly complex tax environment, prudence and compliance will be the eternal themes of tax planning.

Cross-border tax processing

With the deepening of global economic integration, Singapore, as an international financial center, has received increasing attention for its cross-border tax policies. In 2024, the Inland Revenue Authority of Singapore (IRAS) will further improve the cross-border tax system to provide taxpayers with clearer policy guidance and more convenient processing procedures.

In terms of taxation of overseas income, Singapore adopts the taxation principle of territory plus person. Starting from 2024, foreign income received or deemed to be received in Singapore will be subject to tax unless certain exemption conditions are met. According to the latest statistics from IRAS, the number of taxpayers reporting overseas income in 2023 increased by 28% year-on-year, reflecting the increasingly active overseas investment and employment of Singapore residents.

To avoid international double taxation, Singapore has signed double taxation agreements (DTAs) with more than 90 countries and regions. In 2024, new tax treaties with three countries will take effect, further expanding the tax treaty network. These agreements clarify the taxation rights of various types of income and provide specific methods for tax credits. For example, for wages and salaries earned in an agreement country, if the stay there exceeds 183 days, the country where the person works usually has priority in taxing the income.

The overseas income exemption system will be optimized and adjusted in 2024. Overseas income that meets certain conditions can enjoy tax-free treatment, mainly including: overseas investment income (such as dividends, interest, etc.) that has been taxed overseas; overseas branches that originate from “white list” countries and have paid a local tax rate of at least 15% Profits; and certain qualifying foreign service income. In 2023, about 65% of overseas income declaration cases were exempted.

The tax credit system provides another way to avoid double taxation. The calculation method for the unilateral tax credit limit in 2024 remains unchanged, that is, the amount of tax payable in Singapore on the foreign income is the upper limit. However, in practice, the “aggregated credit” option has been added, allowing taxpayers to combine overseas income from different sources to calculate the credit limit, which improves the credit efficiency. Data shows that through the tax credit mechanism, taxpayers will save an average of 23% of their original tax payable in 2023.

Regarding the tax treatment of foreigners, Singapore has formulated differentiated policies based on different residence status and employment situations. Foreigners holding an Employment Pass (EP) can enjoy the “non-resident transition period” preferential treatment in Singapore in their first year, that is, they are taxed according to the lower of the non-resident tax rate and the resident tax rate. This policy will continue to be implemented in 2024, but the application process has been simplified and can be processed through myTax Portal in one stop.

There are also new adjustments to the short-term employment tax regulations. From 2024, foreigners who work in Singapore for no more than 60 days will be exempt from tax if their income does not exceed a certain limit (currently S$30,000). However, it should be noted that this exemption does not apply to certain groups such as company directors and professionals. For foreigners who work in Singapore for 61 days to 182 days, a uniform tax rate of 15% is levied, without considering the progressive tax rate.

The departure tax clearance procedure will be fully electronic in 2024. Employers need to submit applications through the IR21 system at least one month before the expected departure date of foreign employees. The system will automatically calculate the tax payable and generate a payment notice. In order to improve efficiency, IRAS has added a “fast track” service, and eligible applications can be approved within 3 working days. In 2023, about 90% of departure tax clearance cases will be successfully completed through the electronic system.

It is worth noting that “digital nomad” tax policy guidelines have been added in 2024. For foreigners working remotely in Singapore, if they stay in Singapore for more than 183 days, they will need to pay tax in Singapore on their global income even if their employer is overseas. This policy responds to new changes in working patterns in the post-epidemic era and is expected to affect approximately 8,000 foreign remote workers in Singapore.

For executives and professionals who frequently travel between multiple countries, IRAS recommends the following measures:

• Properly record the number of days of stay and work content in each country. It is recommended to use a professional tax calendar tool for management.
• Understand the tax treaty contents of relevant countries in advance and arrange the work location and time reasonably.
• Before obtaining significant overseas income, it is recommended to consult a professional tax advisor to plan the best way to receive income.
• Keep complete proof of overseas income and tax payment certificates in order to apply for tax credits or exemptions.

IRAS reminds that the complexity of cross-border tax issues is rising and recommends taxpayers to pay close attention to policy updates and seek professional assistance when necessary. Data for 2023 show that tax repayment cases due to improper understanding of cross-border tax policies have increased by 15% year-on-year, so it is particularly important to improve policy awareness and compliance awareness.

Actual case analysis

In order to help different groups better understand tax treatment, we combined the latest tax policies in 2024 and analyzed in detail the actual situation and optimal tax arrangements of various taxpayers through specific cases. According to IRAS statistics, more than 60% of questions in tax consultation in 2023 can be answered through similar cases, which reflects the important guiding significance of case analysis to taxpayers.

In the case of employed persons, take Mr. Li, a middle-level manager of a multinational company, as an example. His total income in 2023 is S$180,000, which includes basic salary, year-end bonus and stock option income. Through the rational use of policies such as the Voluntary Provident Fund Supplementary Scheme, professional skills training deductions and parents’ medical insurance deductions, Mr. Lee successfully reduced the tax payable from S$15,950 to S$11,280. This case fully demonstrates how employed persons can optimize their personal tax burden through various tax reduction measures.

The case of Ms. Chen, an independent financial consultant, represents the typical tax treatment of self-employed individuals. Based on the total income of S$250,000, she effectively reduced her taxable income by properly grouping business expenses, using a simplified accounting plan and applying for productivity innovation concessions. What is particularly noteworthy is that by setting up a sole proprietorship, she achieved an overall optimization of the tax burden structure and ultimately saved approximately S$12,800 in tax compared to without planning.

The case of investor Mr. Wang demonstrates the tax treatment of a diversified investment portfolio. Faced with the three main sources of income: dividend income, rental income and capital gains, he made full use of Singapore’s tax-free dividend policy and optimized the taxation arrangement of rental income through the company’s holding of real estate. Through these reasonable tax planning, he significantly reduced the overall tax burden while ensuring compliance.

Among special circumstances cases, the dual identity case of Mr. Zhang, who is both a company executive and runs an online consulting business, is particularly representative. By scientifically distinguishing different sources of income, rationally allocating common expenses, and making full use of preferential tax policies available to different statuses, he achieved significant optimization of tax burdens. This case is a good example of how taxpayers with complex identities carry out tax planning.

For the tax treatment of cross-border income, we can refer to Ms. Liu’s case. As a taxpayer who works in Singapore but also owns real estate investments in Australia, she has effectively avoided double taxation by rationally using the New Zealand-Australia tax treaty and the foreign income exemption policy. By scientifically arranging the timing of income remittances, she not only optimized cash flow, but also maximized after-tax income.

The case of technology entrepreneur Mr. Huang shows how start-up companies conduct tax planning. Although the company is still losing money, through policy support such as preferential plans for start-up enterprises, super deductions for R&D expenditures, and reasonable arrangements for shareholder compensation structures, he successfully reduced the tax burden in the early stages of entrepreneurship and created favorable conditions for the sustainable development of the company. .

According to the IRAS 2023 annual report, taxpayers who adopt reasonable tax planning can save an average of 12-25% of their tax burden. However, it is worth noting that tax planning must be based on legal compliance to avoid unnecessary tax risks caused by radical operations. In 2024, IRAS is launching more typical case analyzes and online tax planning tools to help taxpayers better understand and apply various tax policies. For special and complex cases, taxpayers can obtain personalized advice through appointment consultation services to optimize tax burden while ensuring tax compliance.

As tax policies continue to be improved and updated, IRAS recommends taxpayers to continue to pay attention to policy changes, maintain complete records of income and expenditure, and fully assess the tax impact before making major transactions. For complex tax issues, seeking the assistance of professional consultants in a timely manner will help make more scientific tax decisions, thereby achieving the tax burden optimization goals of individuals or businesses on the basis of compliance.

Frequently Asked Questions and Answers

As Singapore’s tax policies continue to be optimized, taxpayers’ demand for policy interpretation and practical guidance is growing. According to IRAS 2023 annual service statistics, tax consultation volume increased by 23% year-on-year, of which online consultation accounted for 75%. To this end, we have compiled the most representative questions and answers to help taxpayers better understand and perform tax work.

There are several important changes in tax policy in 2024. The first is the adjustment of preferential personal income tax policies. The tax refund amount for low- and middle-income groups has been increased to S$3,000, benefiting about 70% of taxpayers. Second is the implementation of new regulations on taxation of the digital economy, which clarifies the tax obligations of e-commerce platforms and digital service providers. The third is the introduction of a tax incentive policy for green development. Purchases of energy-saving and environmentally friendly equipment can enjoy a 250% tax deduction. These policy changes triggered a large number of inquiries, especially regarding applicable conditions and specific operations.

In terms of handling special circumstances, the tax identification of remote workers will be a hot issue in 2024. IRAS clearly stipulates that even if the employer is overseas, as long as the employer works in Singapore for more than 183 days, he will be taxed in Singapore on his global income. Another frequently consulted issue is the tax treatment of cryptocurrency transactions. IRAS has issued special guidance to recognize the income from frequent transactions as taxable income, while the appreciation gains from long-term holdings are treated as capital gains tax-free.

In response to difficult questions that taxpayers are generally concerned about, IRAS will launch an “intelligent Q&A system” in 2024. For example, for the common question “How to declare income from overseas remote work”, the system will automatically generate personalized answers based on the nature of the job, source of income and length of stay. The system can currently handle about 85% of common problems, greatly improving consultation efficiency.

At the practical level, there are some new convenience measures for tax filing in 2024. The myTax Portal system has been upgraded to support automatic extraction of bank account information. Taxpayers only need to authorize online, and the system can automatically import interest income data. At the same time, the artificial intelligence-assisted reporting function can analyze historical data to remind you of possible missed deductions. According to statistics, this function has helped taxpayers increase their reasonable deductions by 8% on average.

Regarding document preparation, IRAS has simplified the supporting document requirements, but has strengthened the review of certain high-risk projects. For example, the retention period of business expense vouchers for self-employed persons is extended to 7 years, but daily expenses can be deducted in a fixed amount without the need to provide receipts one by one. Property rental income requires a complete rental agreement and receipt and payment records, and it is recommended to save relevant documents digitally.

Consulting channels are also constantly optimized. In addition to traditional telephone and email consultations, IRAS will add video consultation services in 2024, which are particularly suitable for complex issues that require document presentation and instant communication. Through the appointment system, taxpayers can choose a convenient time period for online meetings with tax specialists. Data shows that the problem resolution rate of video consultation reaches 92%, which is significantly higher than other channels.

For taxpayers filing for the first time, it is recommended to first learn basic knowledge through the “Beginner’s Guide” module on the official website. This module contains detailed operation demonstrations and common error tips. If you encounter special circumstances, you can use the “Tax Assistant” applet for preliminary diagnosis, and the system will recommend an appropriate treatment plan based on your personal situation.

When preparing for the 2024 annual return, taxpayers need to pay special attention to several key points: the preliminary assessment notice is generally issued in February, and correction requests need to be made within 30 days of receipt; the final filing deadline is April 18, but it is recommended Complete preparation work two weeks in advance to deal with possible technical problems; if you need to pay taxes in installments, you should apply within 15 days after receiving the tax payment notice.

Recent IRAS data shows that about 40% of correction applications are due to taxpayers’ insufficient understanding of the policy. To this end, it is recommended that taxpayers cross-verify the accuracy of information through multiple channels when dealing with important tax matters. For example, in addition to the official guide, you can also refer to the case analysis and policy interpretation articles regularly published by Wanqibang , and seek professional advice from tax consultants when necessary.

Tax compliance is a continuous work. It is recommended that taxpayers develop the habit of regularly organizing financial information and pay attention to policy updates in a timely manner. The mobile application provided by Wanqibang allows you to subscribe to policy update reminders to help taxpayers grasp the latest information. By rationally utilizing various resources and tools, taxpayers can complete tax declarations more calmly and achieve the dual goals of compliance and tax saving.