i. Name of country
Southeastern Asia, islands between Malaysia and Indonesia
5,866,139 (July 2021 est.)
iv. General Introduction
Because of its excellent infrastructure and public services, Singapore is frequently voted the best Asian city in which to live. It has one of the lowest crime rates in the world and provides its residents with a high quality of life. When measured by GDP per capita, it is ranked as one of the wealthiest countries in the world.
As of June 2019, the number of citizens and permanent residents in work was about 2.20 million. There were about 1.33 million work passes issued to foreign persons. Therefore, about 37.5% of the people in work are non-permanent-resident foreign persons. Permanent residents form 13% of the overall “resident” (that is, citizen and permanent resident) population. If we assume that permanent residents are also about 13% of the number of citizens and permanent residents in work, then, since permanent residents are not citizens by definition, the percentage of foreign nationals working in Singapore exceeds 40% (and we cover more specifics about American tax Singapore in this article).
The government adopts a pragmatic approach towards immigration. On one hand, it recognises that the country needs to be open to immigration because there are significant manpower shortages in the economy. With its rapidly ageing population and low birth rate, the country’s demographics are worrying. Therefore, reliance on foreign manpower has been and will remain a necessity for economic growth. Nevertheless, the government is aware that the citizenry feels that immigration policy has been too liberal, and that the level of immigration is excessive. The topic of foreign persons working in Singapore has become politically fraught. As a result, issues such as competition for jobs, effect on wages and adequacy of housing and public infrastructure have been cast in the spotlight. Locals are unhappy because they are afraid that foreign persons will dominate the job market. They are also upset at how the mass influx of foreign persons over the past decade has led to housing shortages and infrastructure pressures.
The government is seeking to address and manage public opinion. Officially, the policy is to maintain a “two-thirds Singaporean core” in the workforce. The workforce is about two-thirds Singapore/one-third foreign if permanent residents are counted as Singaporeans rather than foreign persons, and by not counting “foreign domestic workers”.
The recent tightening of Singapore’s immigration policies and future legislation should be viewed in this context. At the same time the government is trying ways and means of increasing productivity. There need be correspondingly less reliance on foreign manpower for economic growth if productivity can be increased. Therefore, there is a direct relation between improvements in productivity and the degree by which the foreign manpower policy can be tightened. The government has stated that foreign manpower should complement rather than substitute local manpower. Nevertheless, Singapore will remain open to immigration alongside efforts to increase productivity of and add value to the local workforce.
Changes in work pass requirements are generally matters of administrative practice and do not usually require legislation.
The FCF’s local-hiring requirements have already been changed this year. Before 1 July 2018, it was not mandatory for an employer with 25 or fewer employees, or for an employer with a position paying a fixed monthly salary of at least SGD12,000 to try to recruit locally before applying for a work pass to employ a foreign person. As of 1 July 2018, the threshold is now ten employees, or a fixed monthly salary of SGD15,000. An employer with a payroll of more than ten wanting to fill a position paying less than a fixed SGD15,000 monthly must now demonstrate bona fide efforts to hire locally before it can make a work pass application.
At the start of 2019, the minimum qualifying salary for S pass holders was increased from SGD2,200 to the current SGD2,300. From the beginning of 2020, this will rise to SGD2,400. The MOM has transitional measures to help those affected to cope with the changes. Existing S Pass holders whose passes expire before 1 January 2020 will be allowed to renew based on the existing criterion (that is, a minimum salary of SGD2,300). Holders of passes that expire between 1 January 2020 and 30 June 2020 (both dates inclusive) will be allowed to renew at SGD2,300 for up to one year.
During 2017, Indian newspaper reports suggested that India was suspending intergovernmental review of the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) in response to Indian firms’ complaints that Singapore’s tightening of work pass requirements was inconsistent with her commitments under the CECA. In the event, the two countries successfully concluded their review of the CECA (the second since the agreement was signed in 2005) with an agreement on 1 June 2018 to remove or reduce tariffs on 30 products. The third CECA review process, launched on 1 September 2018, is underway.
Singapore has a developed free-market economy. It has a pro-business reputation due to its attractive investment climate and stable political environment. In 2021, it was ranked as the third least corrupt country in Transparency International’s Corruptions Perceptions Index.
The dominant industries include:
- Financial services.
- Energy and infrastructure.
- Manufacturing (of electronics and chemicals, and in biomedical sciences, logistics, and transport engineering).
- Tourism and medical tourism.
- Information and communication technologies.
Population and Language
The population is estimated to be 5.68 million. The resident population is 4.04 million of which 3.52 million are citizens and 0.52 million are permanent residents. The working language and lingua franca is English. Mandarin, Malay, and Tamil are the official languages, which together with English, are the most commonly used languages.
Singapore’s business culture values harmony, courtesy, and respect for seniority. Punctuality is observed for business appointments. Office hours are generally from 8.30 am to 5.30 pm from Monday to Friday, while banks observe office hours of 9.00 am to 4.00 pm from Monday to Friday. Gazetted annual public holidays include New Year’s Day, Lunar New Year, Good Friday, Labour Day, Hari Raya Puasa, Vesak Day, Hari Raya Haji, National Day, Deepavali, and Christmas Day.
Key Business and Economic Events
Singapore is an active member of the World Trade Organisation (WTO). During the novel coronavirus disease (COVID-19) pandemic, Singapore became a co-sponsor to three statements on trade and COVID-19 at the WTO which seek to ensure that supply chains remain open and connected:
- COVID-19 and the Multilateral Trading System by Ministers Responsible for the WTO.
- Responding to the COVID-19 Pandemic with Open and Predictable Trade in Agriculture and Food Products.Statement on Highlighting the Importance of Micro, Small, and Medium-Sized Enterprises (MSMEs) in the Time of COVID-19.
- The International Monetary Fund (IMF) team conducted discussions through virtual meetings for the 2021 Article IV Consultation with Singapore from 27 April to 11 May 2021. The IMF is of the preliminary view that Singapore entered the pandemic with sizable policy space and robust economic policy frameworks. Although the pandemic had a severe impact, the economy is recovering, and real GDP is projected to expand by 6% in 2021.
Insolvency Restructuring and Dissolution Act 2018 (IRDA). On 30 July 2020, the IRDA came into force, consolidating Singapore’s personal and corporate insolvency and debt restructuring laws into a single piece of legislation. The IRDA came into effect together with 48 related pieces of subsidiary legislation. Accordingly, the Bankruptcy Act and relevant provisions of the Companies Act (Cap. 50) (Companies Act) have been repealed.
The IRDA introduced new features to corporate debt restructuring and insolvency, including:
- Restricting certain contractual rights that are triggered by restructuring proceedings (ipso facto clauses). These clauses allow a party to terminate or modify the terms of a contract on the occurrence of certain events, for example, the contractual counterparty’s insolvency or restructuring. They are unenforceable under the IRDA (section 440, IRDA).
- Enlarging the range of causes of action that can be funded by third parties, specifically certain office-holder avoidance actions, which otherwise may not be pursued due to lack of funds. Both judicial managers and liquidators are statutorily empowered under the IRDA to enter into agreements with third parties to pursue claims and recover more for creditors (section 144(g), 177(1)(a), IRDA).
A summary procedure for the dissolution of companies that otherwise have insufficient assets to administer winding up of the company (section 344, Companies Act).
COVID-19 (Temporary Measures) Act 2020. On 7 April 2020, the COVID-19 (Temporary Measures) Act 2020 was passed with the aim of offering temporary relief to businesses and individuals affected by the COVID-19 pandemic. The Act has subsequently been amended. It covers the following areas of relief:
- Temporary relief from actions due to inability to perform contractual obligations for specified contracts.
- Rental relief and related measures to mitigate the impact of COVID-19 events on eligible lessees and licensees of non-residential properties by providing them relief from the payment of rent and licence fees in specified situations.
- Temporary relief for financially distressed individuals and businesses.
- Temporary measures for the conduct of meetings and court proceedings.
- Temporary measures concerning the remission of property tax.
- Relief from delays in performance because of breach of construction contracts, supply contracts, or related contracts.
- Temporary measures for the conduct of collective property sales.
New Code of Conduct for Leasing of Retail Premises in Singapore. On 26 March 2021, the Fair Tenancy Pro Tem Committee comprising 18 key representatives from both the landlord and tenant communities, industry experts, and academia introduced a Code of Conduct for Leasing of Retail Premises in Singapore (COC). The COC provides a set of guidelines to:
- Enable fair and balanced lease negotiations.
- Develop a governance framework to ensure compliance by the industry.
- Introduce an accessible dispute resolution framework.
- The COC is currently not legally binding. However, members of the committee have committed to adopt and abide by the COC from 1 June 2021 when it came into effect. On 3 May 2021, a Fair Tenancy Industry Committee was formed to serve as the custodian of the COC and to monitor industry compliance. The Fair Tenancy Pro Tem Committee has recommended the government make compliance with the COC mandatory through legislation.
v. Wifi Speed
According to the latest analysis from Ookla, households in Singapore are getting 238.59 Mbps of broadband speed on average, more than twice the global average. By comparison, U.S. residents experience an average of 180.84 Mbps.
vi. Electrical outlet
For Singapore there are three associated plug types C, G and M. Plug type C is the plug which has two round pins, plug type G has three rectangular pins in a triangular pattern and type M is the plug that has three round pins. Singapore operates on a 230V supply voltage and 50Hz.
vii. Per Capita GDP
Real GDP per capita
$93,400 note: data are in 2017 dollars (2020 est.)
$98,400 note: data are in 2017 dollars (2019 est.)
$98,200 note: data are in 2017 dollars (2018 est.)
note: data are in 2010 dollars
tropical; hot, humid, rainy; two distinct monsoon seasons – northeastern monsoon (December to March) and southwestern monsoon (June to September); inter-monsoon – frequent afternoon and early evening thunderstorms
Through the Singapore Global Investor Program, foreign nationals can apply for permanent residency. The program is aimed at entrepreneurs or investors who want to make large financial investments in Singapore, as well as wealthy foreign nationals who want to make Singapore their home.
Entrepreneurs, innovators and investors
The EntrePass is a work pass for carrying on a business in Singapore. It is available to people regarded as entrepreneurs, innovators or investors.
- Possible applicants. An entrepreneur is an individual who complies with one or more of the following:
- Raises SGD100,000 or more in funding for his or her company from a Singapore government investment vehicle or from a venture capitalist or business angel officially recognised by a Singapore government agency. Investment vehicles, venture capitalists and business angels recognised by the government are:
- Vertex Ventures
- SGInnovate (formerly Infocomm Investments Pte Ltd);
- Qualified investors on the StartupSG Equity scheme;
- Venture partners on the Early Stage Venture Fund (ESVF) scheme.
Runs a company that is an incubatee at an incubator or accelerator officially recognised by the Singapore Government. Incubators and accelerators for EntrePass purposes are:
- incubators or accelerators in SPRING Singapore’s Startup SG Accelerator Programme;
- Accredited Mentor Partners under Startup SG Founder;
- the Accreditation@SGD Programme;
SGInnovate-linked incubation or acceleration programmes.
Has significant business experience, business network and entrepreneurial track record, that is, he or she has:
- founded and sold a technology company;
- raised significant funding from investors for a current or past venture;
- had a business incubated by an internationally renowned incubator or accelerator;
- strong industry networks and business contacts related to the business proposed to be set up in Singapore; or
- recognition from a national body, recognised media publication or credible industry organisation for his or her professional, business or entrepreneurial achievements and track record.
An innovator is an individual who complies with one or more of the following:
- Owns intellectual property. To qualify, intellectual property must:
- be registered with an approved national IP institution;
- deliver a competitive advantage to the proposed business;
- not be easily replicable.
- Has a research collaboration with an institute of higher learning (IHL) or research institute in Singapore. The IHLs or research institutes are the:
- A*STAR Research Institutes;
- Campus for Research Excellence and Technological Enterprise (CREATE) entities;
- National University of Singapore;
- Nanyang Technological University;
- Singapore University of Technology and Design;
- Singapore Management University;
- recognised non-profit or private-sector research groups.
- Has extraordinary achievements in key areas of expertise. This refers to exceptional technical or domain expertise relevant to the proposed business as evidenced by outstanding achievements in and/or international recognition of relevant technical or domain expertise.
An investor is an individual who has either:
- A track record of investing in and growing highly scalable businesses.
- At least eight years’ experience as senior management in a large corporation.
- Application procedure and conditions. The application for an EntrePass to carry on business in Singapore is made by the individual. The permitted (and required) business form in connection with an EntrePass application is a Singapore-registered company. This may be registered either after the EntrePass is approved; or, if the company is already registered, it must be less than six months old when the EntrePass application is made. The EntrePass holder is treated as an employee of the company (although no minimum salary is required). Government fees for an EntrePass are SGD330.
EntrePass applications and business plans usually take eight weeks to process and are evaluated by MOM in conjunction with one of three government development agencies:
- The Standards, Productivity and Innovation Board of Singapore (SPRING).
- The Infocomm Media Development Authority (IMDA).
There are significant business spending and job-creation commitments for Singapore citizens or permanents residents attached to an EntrePass. An EntrePass is issued for one year in the first instance. It may then be renewed for another year. Subsequent renewals are good for two years at a time. The business spending and employment commitments for renewal are as follows:
- One year on an EntrePass. No minimum annual business spending or minimum number of local employees.
- Two years. Minimum annual business spending of SGD100,000. At least three local full-time employees (FTEs) or one local professional, manager or executive (PME).
- Four years. Minimum annual business spending of SGD200,000. At least six local FTEs or two local PMEs.
- Six years. Minimum annual business spending of SGD300,000. At least nine local FTEs or three local PMEs.
- Eight or more years. Minimum annual business spending of SGD400,000. At least 12 local FTEs or four local PMEs.
Invest at least SGD 2.5 million in a new business entity or in the expansion of an existing business in an approved business sector
Invest at least SGD 2.5 million in an approved fund that invests in Singapore-based companies
Invest at least SGD 2.5 million in a Singapore base Family Office having assets under management of at least SGD 200 million
- Nine–twelve months
ADVANTAGES OF THE SINGAPORE RESIDENCY CARD
- Dependents included:
- Children under 21
- Permanent Residence provided to applicant and dependents including right to live in Singapore, work and study
- Parents and children over 21 can obtain 5-year visit visa
- High-quality healthcare and education system
- Tax-efficient jurisdiction
- Eligible to apply for Singapore Citizenship after holding permanent residence card for at least 2 years
BENEFITS OF SINGAPORE CITIZENSHIP ACQUISITION
TAX OPTIMIZATION- The state has an attractive tax regime and conducive conditions for entrepreneurs.
CITIZENSHIP FOR THE WHOLE FAMILY- Together with the main investor, spouse and children under the age of 21 years are eligible for Singapore citizenship.
PURCHASE OF REAL ESTATE – Being a citizen of Singapore, you will be able to buy real estate in the country.
PERMISSION TO RESIDE IN THE COUNTRY – Parents of the investor are allowed to obtain a long term visa to stay in Singapore.
ASSETS PROTECTION- You can save your capital in reliable Singapore banks with high security and confidentiality.
SOCIAL SECURITY – The state provides citizens with education grants and high-quality medical services.
REQUIREMENTS FOR SINGAPORE RESIDENCY CARD
- Clean criminal record
- Substantial entrepreneurial experience (min 3 years’), and must provide 3 years of audited financial statements
- Must be running a business with annual turnover of at least SGD 200 million p.a. on average over the last 3 years
- Applicants can consolidate their businesses to meet the minimum turnover requirement
- If the company is privately owned, the applicant must have a shareholding of at least 30% of the company.Must submit a detailed business or investment plan, including key milestones, to be realised within 3 years of the investment
- The business must be in an approved industry sector
Procedures and Time Frame
- Payment of application fee to the Singapore Government
- Application forms and supporting documents must be submitted within 1 month of payment of the application fee
- Applicant attends interview with the Economic Development Board of Singapore
- Approval in Principle (AIP) issued in 2 – 4 months
- Must make investment within 6 months of AIP
- Final approval granted upon proof of qualifying investment
- Move to Singapore and complete permanent residence (PR) formalities within 12 months from final approval
- Upon obtaining PR, a Re-Entry Permit (REP) is issued for 5 years to enable PR to be maintained when outside Singapore
- Upon expiry the REP is renewed for 3- or 5-years subject to business performance
xi. Natural Resources
fish, deepwater ports
xii. Ethnic Groups
Chinese 74.3%, Malay 13.5%, Indian 9%, other 3.2% (2020 est.)
note: data represent population by self-identification; the population is divided into four categories: Chinese, Malay (includes indigenous Malays and Indonesians), Indian (includes Indian, Pakistani, Bangladeshi, or Sri Lankan), and other ethnic groups (includes Eurasians, Caucasians, Japanese, Filipino, Vietnamese)
English (official) 48.3%, Mandarin (official) 29.9%, other Chinese dialects (includes Hokkien, Cantonese, Teochew, Hakka) 8.7%, Malay (official) 9.2%, Tamil (official) 2.5%, other 1.4%; note – data represent language most frequently spoken at home (2020 est.)
Buddhist 31.1%, Christian 18.9%, Muslim 15.6%, Taoist 8.8%, Hindu 5%, other 0.6%, none 20% (2020 est.)
xv. Median Age
total: 35.6 years
male: 35.4 years
female: 35.7 years (2020 est.)
urban population: 100% of total population (2021)
rate of urbanization: 0.74% annual rate of change (2020-25 est.)
xvii. Physician density
2.29 physicians/1,000 population (2016)
xviii. Government type
xix. Unemployment Rate
2.25% (2019 est.)
2.1% (2018 est.)
Headline Personal Income Tax Rate (highest marginal tax rate)
- 22% (+ 20% tax on pension)
Gains or profits (whether in the form of cash or benefits-in-kind) for any services rendered in Singapore or any form of employment exercised in Singapore are taxable (Income Tax Act).
The amount of tax to be paid and applicable tax rates depend on an individual’s tax residency status (Second Schedule, Income Tax Act).
An individual is regarded as a tax resident if they either:
- Stay or work in Singapore: for at least 183 days in a calendar year; continuously for three consecutive years; or work for a continuous period straddling two calendar years and their total period of stay (including the individual’s physical presence immediately before and after their employment) is at least 183 days.
(Section 2, Income Tax Act.)
- Qualify as a tax resident under a two-year administrative concession when they: work in Singapore for a period straddling two calendar years;
- and their employment period (including the individual’s physical presence immediately before and after their employment) is at least 183 days. This applies to foreign employees who have entered Singapore since 1 Jan 2007 but excludes company directors, public entertainers, or professionals
The rate of income tax for resident individuals ranges from 0 to 22% (with effect from the 2017 year of assessment) depending on their total remuneration. Tax resident individuals are also entitled to tax reliefs to offset against the taxable income and may be eligible to enjoy the benefits of double taxation treaties.
Individuals who are Singapore citizens or permanent residents must also make contributions to the Central Provident Fund (a form of social security). The contribution rates range from 5% for employees over 65 years of age to 20% for those aged 55 years and below.
Non-Tax Resident Employees
The income tax rate for non-resident individuals is a flat rate of 15% or the progressive resident tax rate, whichever is higher. Non-tax resident individuals can be protected from being taxed on the same income in Singapore if there is an applicable double taxation treaty.
Directors’ fees and other income for example, rent earned in or derived from Singapore, will be taxed at a rate of 22%. However, if an individual is employed for 60 days or less in a year, income derived from their employment is exempt from tax (provided that the individual is not a company director, public entertainer, or professional in Singapore).
Individuals who are not Singapore citizens or permanent residents do not need to make contributions to the Central Provident Fund.
Non-resident individuals can enjoy time apportionment for their Singapore employment income if they qualify under the not ordinarily resident (NOR) scheme. The NOR scheme will cease after the 2020 year of assessment.
Headline Corporate Income Tax Rate (excluding dividend taxes)
Corporate Tax Rate
- The standard corporate tax rate in Singapore is 17%. A partial tax exemption is eligible for first SGD 300,000 of chargeable income.
Income Tax Rate
- Singapore personal tax rates start at 0% and are capped at 22% (above S$320,000) for residents and a flat rate of 15% to 22% for non-residents. To increase the resilience of taxes as a source of government revenue, Goods and Services Tax (GST) was introduced in 1994. The current GST rate is 7%.
- A business entity’s income that accrues in or is derived from Singapore or is received in Singapore from outside the country, is subject to income tax regardless of the business entity’s tax residency status (section 10, Income Tax Act).
The tax residency of a business entity is determined by the place in which the business is controlled and managed. The location of a business entity’s control and management is a question of fact. Typically, the location of a company’s board of directors’ meetings, during which strategic decisions are made, is a key factor in assessing residency. The place of incorporation of a company is not necessarily indicative of its tax residence. The residency status of a company may change.
Tax Resident Business
A tax resident business entity can claim benefits under the Income Tax Act or double tax treaties to which Singapore is a party.
Non-Tax Resident Business
Certain types of income derived from Singapore by non-resident businesses may be subject to withholding tax.
The main tax that potentially applies to a business vehicle is corporate income tax. A company is taxed at a flat rate of 17% on its chargeable income (that is, income that accrues in or is derived from Singapore or is received in Singapore from outside the country) regardless of whether it is a foreign or local company.
A company is required to file its Estimated Chargeable Income (ECI) within three months from the end of its financial year, unless it meets the criteria for waiver of this requirement. The Inland Revenue Authority of Singapore will issue its notice of assessment (NOA) on the amount of tax payable. The company is required to pay the tax shown in the NOA within one month from the date of the NOA, unless payment is made through agreed instalments.
Other taxes that may apply to businesses are:
- Goods and services tax (for businesses with annual revenue of SGD1 million or more).
- Property tax on immovable property owned by businesses.
- Stamp duty on documents (including the sale or purchase of real property and scrip shares).
- If a business is structured as a partnership, the partners’ income is subject to income tax.
Singapore has an extensive network of double tax treaties and limited treaties with more than 80 jurisdictions, including Australia, China, Indonesia, Japan, Malaysia, and the UK.
Singapore has more than 80 double taxation treaties (DTAs) with other jurisdictions, which cover most major economies within the Asia-Pacific region and Europe. DATs generally follow the model from the Organisation for Economic Co-operation and Development (OECD).
Generally, Singapore’s DTAs sets out the taxing rights between Singapore and its treaty partner on the different types of income arising from cross-border economic activities between the two jurisdictions and provides for a reduction or exemption of tax on certain types of income. In addition, DTAs that are amended by the OECD Multilateral Convention to Implement Tax Treaty
Related Measures to Prevent Base Erosion and Profit Sharing 2017 (MLI) will be amended to include the following:
- The inclusion of a new preamble, which states that the purpose of the DTA is to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance.
- The inclusion of a “principal purpose test” provision, which is an anti-abuse rule to deny double tax treaty benefits in abusive cases.
- The inclusion in some double tax treaties of provisions, which allow taxpayers to request for mutual agreement procedure cases to be resolved through an arbitration process if the competent authorities are unable to reach an agreement within a specified time period.
Singapore enacted the Income Tax (International Tax Compliance Agreements) (Common Reporting Standard) Regulations 2016, which entered into force on 1 January 2017 (CRS Regulations). The CRS Regulations adopt the CRS and the first exchange took place in September 2018.