The taxation system in Singapore is generally consistent with tax systems in other developed nations. There are taxes on income (individual and corporate), on dividends, on goods and services, and on property. Unlike many western nations, there is no tax on capital gains, a policy meant to encourage investment by citizens and foreigners alike.

Additionally, unlike most countries that are organized with national, provincial/state and municipal levels of government, Singapore has a single level of government. As a result, taxation is less burdensome on a relative basis to many other nations. Currently, there are no taxes to be paid upon the first SGD$20,000 chargeable individual income; the subsequent tax rate starts at 3.5 percent up to a maximum of 20 percent on individual income.

Personal Income Tax

The personal income of residents in Singapore is subject to income tax calculated on a sliding scale ranging from 2 percent on the first SGD$5,000 to 28 percent on income greater than SGD$400,000.

For expats working in Singapore, the amount of income tax you have to pay to the Singaporean government depends on several criteria:

1) Whether you are treated as a tax resident or a non-tax resident of Singapore

2) How much income you earn

3) Whether your home country has a tax treaty with Singapore, as well as the provisions of the treaty.

Singapore has tax treaties (double taxation agreements) with more than 50 countries. However, you will need to show evidence that you are a tax resident of a treaty country. For more information, visit IRAS website at www.iras.gov.sg.

For foreigners, your tax residency status depends on the employment period in Singapore.

For years 2007 and 2008, the personal income earned by a foreigner who resided in Singapore for not more than 60 days in a year is tax exempted.

A foreigner who resided in Singapore for more than 60 days but less than 183 days in a year, and whose income is derived from or received in Singapore, is subject to tax at the rate applicable to Singapore residents or 15 percent, whichever is higher. No tax reliefs may be claimed.

A foreigner who resides and works in Singapore for more than 183 days in a year is considered a resident, and is taxed at progressive resident tax rates. Tax reliefs may be claimed.

It should be noted that any income arising from sources outside the country and received in Singapore by an individual (other than partners of a partnership) is exempt from tax.

Prior to your departure from Singapore, your employer is obligated to seek tax clearance from you, as they will be held liable for any tax that the employee owes IRAS. Pending the tax clearance, most employers will withhold the monies due to you until tax clearance is completed. The same applies if you change employers while still living and working in Singapore.

For more information and for the latest updates, refer to the Inland Revenue Authority of Singapore (IRAS) website. There is a useful section on Individual tax obligations for foreigners.

Goods and Services Tax (GST)

GST is a flat-rate consumption (or value-added) tax that is applied to most all goods and services consumed in the country. When it was first introduced in 1994, the GST rate was 3 percent, and as of July 2007, the current GST rate is 7 percent. Only GST-registered companies are permitted to collect GST. Tourists can claim a refund on the GST if the goods are brought out of Singapore within two months of the purchase.

Property Tax

A property tax is imposed on all properties in Singapore. The tax amount is based on the Annual Value (estimated rental value) of the property. The current property tax rate is 10 percent. Owner-occupied properties are taxed at a concessionary rate (currently at 4 percent). Property tax is payable in advance by the end of January each year.