Singapore is one of the premier destinations for expats due to its highly advanced economy and its openness to global markets. In 2011 Singapore has been ranked the best country in the world to do business by the World Bank Ease of Doing Index. Since there are a lot of Americans who plan to move to Singapore, we get a lot of expat tax questions. Many clients wonder whether expats Singapore have to pay overseas taxes on income in Singapore. American expats Singapore must file US expatriate tax returns since they are subject to the US taxation on the worldwide income. Consequently, expats Singapore would like to understand how they can minimize foreign income taxes paid when they file US expat tax returns. Additionally, Americans in Singapore wonder whether we offer US expatriate tax services.
Expatriate Tax Services and Returns for Expats Singapore
US citizens and green card holders should understand the expat tax requirements in Singapore since it affects directly the US tax liability. There are several ways to avoid double taxation by applying several US exclusions under the Internal Revenue Code section 911.
- Foreign earned income exclusion. American expats Singapore who meet either bona fide or physical presence test may be able to exclude up to $101,300 for 2016 on their expatriate tax returns.
- Foreign housing exclusion. American expats Singapore can minimize taxes on foreign income by deducting foreign housing expenses. Singapore is ranked the 5th most expensive place in Asia after Tokyo, Osaka, Hong Kong, and Beijing.
- Foreign tax credit. American expats Singapore may be able to use a foreign tax credit to minimize U.S. taxes if they paid overseas taxes.
Also, American expats Singapore must be aware that they may be required to file the FBARs to report foreign financial accounts if the aggregate value of these accounts exceeds $10,000 at any time during the year.
Tax system in Singapore – FAQ
I am an American expat in Singapore. Are expats Singapore taxed on their worldwide income?
Singapore uses a territorial basis of taxation. Singapore assesses an income tax on all income derived from Singapore. Effective January 1, 2004, all income derived from foreign sources outside of Singapore, even it is received in Singapore, is exempt from taxes in Singapore. Paying overseas taxes in Singapore impacts US expatriate tax returns.
Who is considered a tax resident in Singapore?
An expat in Singapore is considered a resident if s/he resides in Singapore or works in Singapore (other than as a director of a company) for 183 or more days.
What is the tax year in Singapore?
The tax year in Singapore is a calendar year. Tax return due date is April 15 as it is in the USA.
What are foreign income tax rates in Singapore?
Singapore uses a progressive tax rate up to 20%. Employment income tax rate is usually 15%. American expats can claim a foreign tax credit for overseas taxes paid in Singapore.
Which income is considered a taxable income in Singapore?
The following income items are generally subject to tax: salary, bonus, wages, allowances, accommodation, etc. Interest income from deposits in approved banks of Singapore is exempt from tax. There is no capital gain tax in Singapore unless the individual is considered a trader or dealer. Careful tax planning is required to minimize overseas taxes paid in Singapore.
Can American expats Singapore file a tax return on overseas taxes with a spouse?
The income of spouses is assessed and reported separately. However, spouses can choose to transfer qualifying rental deficits and deductions to each other.
Is it a requirement to file a tax return in Singapore every year?
Tax forms are usually issued to individuals around February-March and have to be filed to the Inland Revenue Authority of Singapore (IRAS) by April 15.
Does Singapore have a double-taxation treaty and social security agreement with the USA?
There is no such an agreement in 2011. Also, Singapore does not have a totalization/social security agreement with the USA either.
These are some of the basic overseas tax issues that American expats in Singapore must consider. It is essential to stay up to date with the latest developments released by the Inland Revenue Authority of Singapore.
American expats Singapore with additional questions about overseas taxes paid in Singapore as well as filing US expatriate tax returns should seek help of an expat tax CPA that provides expatriate tax services. International tax experts at Artio Partners will be pleased to assist with various expat tax questions.