SINGAPORE Law and Practice Contributed by: Lee Woon Shiu and Cheung Kuan Swan (Catherine), DBS Private Bank
3.5 Employment Income Employment income derived from work carried out in Singapore is subject to tax. This includes salaries, wages, bonuses, and benefits in kind. Resident individuals are taxed on employment income from services performed in Singapore. Foreign- sourced employment income is generally not taxable, unless it relates to services performed in Singapore. Non-resident individuals are taxed on employment income arising in Singapore. The applicable rate is generally a flat 15%, or the progressive resident tax rates, whichever results in a higher tax liability. No personal reliefs are granted. Short-term assignments and cross-border employ - ments are governed by specific regulations. • Short-term employment exemption – non-resident individuals on short-term employment in Singa - pore for 60 days or less in a calendar year may be exempt from income tax, provided certain condi - tions (and exceptions) are met (the “60-Day Rule Exemption”). The 60-day period includes week - ends and public holidays that fall within the work period. To qualify, the individual must not earn income as a director, public entertainer, or profes - sional exercising a vocation. The employment must be with a foreign employer that is not resident in Singapore, and the income must not be borne by a permanent establishment or a fixed base that the employer has in Singapore. • Remote working arrangements may have tax implications depending on where the duties are performed, and on the tax residency status of the individual and the entity. • Individuals – income earned by individuals working remotely in Singapore for a foreign employer may be treated as Singapore-sourced and subject to Singapore income tax, depending on factors such as the duration of stay and the nature of the work performed. • Corporations – employing staff who work remotely from Singapore may create permanent establish - ment (PE) risk. This could expose the foreign company to corporate income tax in Singapore on profits attributable to that PE. The IRAS has issued
ent’s country of residence, provided the conditions for relief are met. 3.4 Capital Gains Singapore generally does not impose capital gains tax. As a result, gains from the disposal of capital assets, such as shares, property, or other investments, are typically exempt from income tax. However, if these gains are considered revenue in nature, they will be subject to income tax. This typi - cally arises where there is frequent trading or where transactions are undertaken with a clear intention to resell at a profit. Whether gains are capital or revenue is a question of fact and depends on the specific facts and circumstances of each case, often guided by judi - cial concepts known as the “badges of trade”. In making this determination, the Inland Revenue Authority of Singapore (IRAS) considers several fac - tors, including how long the asset was held, the fre - quency of similar transactions, and the taxpayer’s intention at the time the asset was acquired and dis - posed of. Section 10L of the Singapore Income Tax Act, which took effect from 1 January 2024, introduces a frame - work under which tax may be imposed on certain gains derived from the sale or disposal of foreign assets occurring on or after 1 January 2024, where those gains are received in Singapore by businesses that lack adequate economic substance in Singapore. This provision forms part of Singapore’s response to international tax developments. It brings specified foreign-sourced disposal gains within the scope of Singapore income tax, even though Singapore does not generally tax capital gains. Accordingly, Section 10L may limit the availability of existing exemption regimes, including the safe har - bour under Section 13W for gains from the disposal of equity investments, where the relevant conditions in Section 10L are not met.
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