Need HELP on income tax matter

[eekwan7]

Hi all,

I have arrived in Spore on 27th July 15 and started working in Spore from 29th July 15 until now. And I have recently received a letter from IRAS about income tax system in Spore. In the letter, it states that if someone work or stay in Spore for less than 183 days, he/she will be taxed at the non-resident tax rate of 15%.

So, I am wondering if I would be taxed at 15% for this year of assessment (2015)? That would be quite a huge amount of money being taxed by the government.

FYI, I am holding EP pass with a 2 years validity. I will be much appreciated if someone will clarify this matter for me. Thank you.

[ecureilx]

Hi all,

I have arrived in Spore on 27th July 15 and started working in Spore from 29th July 15 until now. And I have recently received a letter from IRAS about income tax system in Spore. In the letter, it states that if someone work or stay in Spore for less than 183 days, he/she will be taxed at the non-resident tax rate of 15%.

So, I am wondering if I would be taxed at 15% for this year of assessment (2015)? That would be quite a huge amount of money being taxed by the government.

FYI, I am holding EP pass with a 2 years validity. I will be much appreciated if someone will clarify this matter for me. Thank you.

You file the returns, and IRAS will send their assessment.

If they decide 15% it is, pay up.

And from what I have seen, you will be offset in next year's tax as a tax resident
Though some claim to have gotten refund of excess tax by submitting the documents clarifying the continued residence and qualifying for lower rates

[sundaymorningstaple]

If you have a valid EP that is good for over 12 months you will automatically be given the resident rate, however, if you don't stay for the given 12 months, then when your tax clearance (IR-21) is filed by the employer, they will recalculate your taxes based on the 15% non-resident flat rate. So if you came in the 2nd half of the year, you best ensure you keep your job for at least 12 months and a day.

[eekwan7]

If you have a valid EP that is good for over 12 months you will automatically be given the resident rate, however, if you don't stay for the given 12 months, then when your tax clearance (IR-21) is filed by the employer, they will recalculate your taxes based on the 15% non-resident flat rate. So if you came in the 2nd half of the year, you best ensure you keep your job for at least 12 months and a day.

So, that means I don't have to pay 15% flat rate during my first year (2015) as long as I am able to work for at least 12 months and a day?

[the lynx]

From my experience, if you have a 2-year EP and you start employment at the second half of the year, IRAS would exempt you from paying tax at the following April, but you will be taxed at the tax resident rate the next April after that. On that second year, I cannot remember if they will tax from your first year (which you got exempted from earlier) or second year (taxable year) for that one.

[sundaymorningstaple]

Normally, you will be taxed on that first partial year if you are on an EP of at least 12 months duration. (Provided which you have earned a minimum of 20K during that period - assuming you DO have an EP of at least 12 months). At least that has been the experience I've encountered with staff over the past 20 years as an HR functionary. A lot would have to do with the industry I would guess, as well, as some industries hire on contract basis and they could apply for 12~24 months visas but only work somebody for 4 or 5 months. This probably has been tracked by industry and employers I would think, and they would then tax accordingly. I would just make sure you kept the 15% handy and then wait for the tax bill. If taxed at resident rates, then go on a vacation.

[ecureilx]

. I would just make sure you kept the 15% handy and then wait for the tax bill. If taxed at resident rates, then go on a vacation.

+1

[eekwan7]

Normally, you will be taxed on that first partial year if you are on an EP of at least 12 months duration. (Provided which you have earned a minimum of 20K during that period - assuming you DO have an EP of at least 12 months). At least that has been the experience I've encountered with staff over the past 20 years as an HR functionary. A lot would have to do with the industry I would guess, as well, as some industries hire on contract basis and they could apply for 12~24 months visas but only work somebody for 4 or 5 months. This probably has been tracked by industry and employers I would think, and they would then tax accordingly. I would just make sure you kept the 15% handy and then wait for the tax bill. If taxed at resident rates, then go on a vacation.

What do you mean by 'taxed by the first partial year'? And what if the total salary earned during this period (from July 15 to Dec 15) is less than 20K, with an EP of 2 years validity? How much will I be taxed then?

Really appreciate any advice to clear the confusion. Thank you.

[Strong Eagle]

He means that you will be taxed for the period 19 July through December 31. Your employer will file an IR8A for the amount you have earned.

In all likelihood, with a 2 year EP, you will be taxed at the resident rate, no matter what your salary is. There is no tax if you earned less than $20,000.

But if you fail to meet the overall time requirement and leave your company, the government will declare non resident tax and demand payment. The tax is 15% on all income. By my calculations, you will have been in Singapore 157 days as of December 31.

[eekwan7]

He means that you will be taxed for the period 19 July through December 31. Your employer will file an IR8A for the amount you have earned.

In all likelihood, with a 2 year EP, you will be taxed at the resident rate, no matter what your salary is. There is no tax if you earned less than $20,000.

But if you fail to meet the overall time requirement and leave your company, the government will declare non resident tax and demand payment. The tax is 15% on all income. By my calculations, you will have been in Singapore 157 days as of December 31.

Yes, it will be around 150 days. So, as long as I continue to work in the current company for the 2 years of EP, I will be declared as resident tax rate?

[the lynx]

Shouldn't be a problem. Either you get taxed resident rate, or you get exempted like what happened to me previously.

[eekwan7]

Thank you for all the helpful advices. I am more clear on how it works now. Really appreciate it.

[bestar_secretarial]

If IRAS tax rules applied strictly:

Year 1: you will be taxed at 15% flat rate (exemption is for people working less than 60 days in a year) as you do not stay more than 183 days in a year (or did you I mean stay not work)? If you have stayed more than 183 days, congratulations, you are deemed a tax resident. If you are taxed 15%, make a trip to IRAS with your passport.

Year 2: You will be tax at resident rate;

Year 3: If you stay through to 3rd calendar year, you will be taxed at resident rate no matter how long you stay --- when a person works 3 consecutive years in Singapore (be it partial in Year 1 and 3), you will be assessed resident status for all the 3 years --- so given this, you may go back to IRAS to get reassessment on Year 1 and get back your money based on resident rates

(For Year 1, I only heard cases of leniency if you get 2 years' EP etc, but I am really not falling for that. And, if you are a mom-resident, the S$22K min will not come into play, you will pay flat 15% on whatever is your earnings).

Tell you what, go down you Revenue House at Novena, spell your case and friendly (and many a time pretty) officers will attend to you with all the good answers from the horse's mouth. Ours is the friendliest tax people in the world.

[sundaymorningstaple]

If IRAS tax rules applied strictly:

Year 1: you will be taxed at 15% flat rate (exemption is for people working less than 60 days in a year) as you do not stay more than 183 days in a year (or did you I mean stay not work)? If you have stayed more than 183 days, congratulations, you are deemed a tax resident. If you are taxed 15%, make a trip to IRAS with your passport.

Year 2: You will be tax at resident rate;

Year 3: If you stay through to 3rd calendar year, you will be taxed at resident rate no matter how long you stay --- when a person works 3 consecutive years in Singapore (be it partial in Year 1 and 3), you will be assessed resident status for all the 3 years --- so given this, you may go back to IRAS to get reassessment on Year 1 and get back your money based on resident rates

(For Year 1, I only heard cases of leniency if you get 2 years' EP etc, but I am really not falling for that. And, if you are a mom-resident, the S$22K min will not come into play, you will pay flat 15% on whatever is your earnings).

Tell you what, go down you Revenue House at Novena, spell your case and friendly (and many a time pretty) officers will attend to you with all the good answers from the horse's mouth. Ours is the friendliest tax people in the world.

The reality of it is a wee bit different than what the above poster states.

If you are here more than 60 days but less than 183 day and fall into the 15% bracket as a non-resident, IF you are on an EP of at least 12 months, normally IRAS will only tax you at resident rates and any adjustment will be made when the IR-21 is filed by the employer a month before your last day of work. This happens in the vast majority of cases. But it's always safer to set aside the 15% just in case.

Oh, as yes, the tax folks here are a lot more accessible and friendly than a lot of tax men.