SINGAPORE Law and Practice Contributed by: Lee Woon Shiu and Cheung Kuan Swan (Catherine), DBS Private Bank
• Physical Presence/Employment – the individual is physically present in Singapore or exercises employment in Singapore for 183 days or more in the preceding calendar year. • Continuous Stay – the individual resides in Singa - pore for a continuous period spanning two calen - dar years, with their total stay amounting to at least 183 days. • Three Consecutive Years – the individual is present in Singapore for three consecutive years. 2.3 Taxation of Resident Individuals In Singapore, tax resident individuals are subject to income tax on income accruing in or derived from Singapore. Singapore does not tax the worldwide income of tax resident individuals. Foreign-sourced income received in Singapore by tax resident individuals is generally exempt from tax, with the exception of those received through partnerships in Singapore. Relief mechanisms available to tax resident individu - als include deductions on expenses, donations and personal reliefs. The income of tax residents is subject to income tax at progressive rates ranging from 0% to 24%. 2.4 Taxation of Non-Resident Individuals A non-resident individual for Singapore tax purposes is an individual who does not qualify as a tax resident of Singapore. Non-resident individuals are typically taxed on all income sourced within Singapore. This includes employment income, trade or business income, rent - al income from Singapore immovable property, and other specific passive income (eg, interest, royalties) derived from Singapore. Employment income derived by non-resident individu - als is typically taxed at a flat rate of 15% or at the resident progressive tax rates, whichever results in a higher tax liability, with no personal reliefs. Other Singapore-sourced income such as director’s fees, rentals, and royalties, are generally taxed at a
flat rate of 24% (from Year of Assessment (YA) 2024). Short-term employment (≤60 days) is usually exempt from employment income, subject to certain excep - tions. However, withholding tax applies to certain pay - ments. Certain types of income, such as interest and royalties, may be subject to withholding tax at a reduced rate or exempted under an applicable DTA. This means tax rates for non-residents may differ from those for residents. 2.5 Tax Residence of Legal Entities A legal entity (typically a company) is considered as a tax resident in Singapore if its control and manage - ment are exercised in Singapore. This determination is based on a factual assessment, primarily focusing on where the company’s strategic decisions are made. The key criteria for determining a company’s tax resi - dence are as follows. • Control and management – this is a factual assess - ment, usually determined by the place where the business’ strategic decisions are made, which is typically where the board of directors holds its meetings. • The place of incorporation alone is not determina - tive of tax residence. • A company incorporated in Singapore may be con - sidered as non-tax resident if its control and man - agement are exercised outside Singapore. Con - versely, a company incorporated outside Singapore may be regarded as tax resident if its control and management are exercised within Singapore. 2.6 Definition of Permanent Establishment Singapore’s domestic definition of permanent estab - lishment (PE) outlined in Section 2 of the ITA, includes a fixed place of business through which an enterprise conducts all or part of its operations. A PE includes a place of management, branch, office, factory, warehouse, workshop, farm or plantation; mine, oil or gas well, quarry, or a site for extracting natural resources; or a building, work site, construc - tion, installation, or assembly project. The term also extends to agents who act on behalf of a person and
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