When you are a company owner or director, you are bounded by a hectic schedule, which results in missing out on essential things. Though companies’ & businesses’ taxes are paid on time, they miss out on paying Personal Income Tax on their salary. In this blog, we will walk you through the vital information on paying Personal Income Tax and benefits offered by Singapore Government on paying taxes.
What elements are considered for Personal Income Tax for Company Owners?
In Singapore, Company or Business owners/founders who are foreign, local, resident, or non-resident are considered Self-Employed. All of them own a sole proprietorship.
In Singapore, if you are self-employed, you must declare your business income as part of your Total Personal Income. Therefore, paying your Business Income Tax means you are eventually paying your Personal Income Tax.
Singapore Government gives the advantage to Self-Employed individuals by Pre-filling their Self-Employed Income, which is considered income to the Tax system.
E.g., if you are running a sole proprietorship firm in Singapore that makes around $150,000 in profits, you must declare business income every year on this amount and pay Personal Income Tax on the same amount.
Pro Tip: If you opt for the Pre-Filling Scheme offered by the Singapore Government, then you can go to myTax Portal to view all your pre-Filled information in the “Income, Deductions, and Relief Statement” (IDRS) section.
What elements are considered for Personal Income Tax for Company Directors?
If you are working as a Private Limited Company Director in Singapore, you are entitled to receive a monthly salary or remuneration, depending on your contract with the company.
The amount you receive in the form of salary or remuneration is considered as your Personal Income, and you must pay income tax on your gross salary every year. To pay Personal Income Tax on your gross salary, you must fill out Form IR8A from IRAS (Inland Revenue Authority of Singapore).
On top of the salaries, Company Directors receive several benefits from the company, such as accommodation expenses, cars, allowances, and much more.
If a Company Director or any other company employee is receiving benefits from the company/employer, they must file Appendix 8A and attach it to Form IR8A.
E.g., if a Private Limited Company Director receives $48,000 in accommodation expenses annually from the employer, they must file Appendix 8A.
Which Income is Taxable in Singapore?
For Company Directors, Owners, and Founders, the taxable income is calculated on Gross Income from which certain deductions are deducted. The final amount after deductions is the actual income on which you are taxed.
Any income that you earn in Singapore is taxable income. Any income that you earn outside Singapore is taxable only in the following two scenarios:
- If you receive that income via partnerships in Singapore
- If you travel overseas for the work purpose for a Singapore company and the income you earned overseas.
Types of Income that a Company Director must pay in Singapore
There are two types of Income that a Company Director must pay in Singapore:
Tax Residency
In Singapore, Company Directors are taxed based on their Tax Resident Status. The following criteria must be met to be entitled as a Tax Resident in Singapore:
- Must have stayed or worked in Singapore for at least 183 days in a calendar year.
- Must have worked for three consecutive years in Singapore.
- Must have worked for at least two calendar years in Singapore, provided a total period of stay in Singapore before & after employment is at least 183 days.
Tax Rate for Tax Residents Status Company Directors
- If the company director is a foreign non-resident, the tax rate is flat 22%.
- If the company director is a resident, income is taxed at a progressive rate.
Income Tax Rate for Resident Company Directors in Singapore
Company Directors who are residents- in Singapore are taxed at the following progressive tax rates:
| Chargeable Income SGD ($) | Rate (%) | Gross Tax Payable($) |
| On the first 20,000 | 0 | 0 |
| On the next 10,000 | 2 | 200 |
| On the first 30,000 | – | 200 |
| On the next 10,000 | 3.5 | 350 |
| On the first 40,000 | – | 550 |
| On the next 40,000 | 7 | 2,800 |
| On the first 80,000 | – | 3,350 |
| On the next 40,000 | 11.5 | 4,600 |
| On the first 120,000 | – | 7,950 |
| On the next 40,000 | 15 | 6,000 |
| On the first 160,000 | – | 13,950 |
| On the next 40,000 | 18 | 7,200 |
| On the first 200,000 | – | 21,150 |
| On the next 40,000 | 19 | 7,600 |
| On the first 240,000 | – | 28,750 |
| On the next 40,000 | 19.5 | 7,800 |
| On the first 280,000 | – | 36,550 |
| On the next 40,000 | 20 | 8,000 |
| On the first 320,000 | – | 44,550 |
| Over 320,000 | 22 |
How to File Taxes in Singapore?
If your personal income is above 22,000 for the financial year, then you must file a Personal Income Tax Return. You must submit it to the Singapore Tax Authority by the 15th of April every year. If there is no income in the previous years, you must declare Zero income in your Tax form.
It must be submitted to the Singapore Authority by the 15th of April via paper or the 18th of April via e-filling.
Note:Â IRAS (Inland Revenue Authority of Singapore) will impose penalties on the failure of non-filing of Tax, which can be escalated for legal actions.
There are two ways to submit a Tax return to the Singapore Authority: online or by mail.
If you want to submit a Tax return in paper form by mail, you must request the Singapore Authority to mail you the paper form. However, if you wish to submit a Tax return via e-filling, the online form is available from the 1st of March every year.
There are three types of Forms for Personal Tax Filing:
- Form B1 for Tax Residents’ individuals
- Form B for Self-Employed
- Form M for Foreign/Non-Residents individuals
Once you submit the Tax Return to the Singapore Authority, you will receive a Notice of Assessment/your Tax bill between May and September. The tax bill contains the amount that you need to pay as Tax. You must pay the tax amount within 30 days of receiving the Notice of Assessment/Tax bill.
Conclusion
After going through the blog, you will have excellent clarity on Personal Income Tax Filing for Company owners, founders, and directors. However, if you still have any questions, feel free to contact us.
At Bestar Services, we provide Personal Income Tax Filing Services for Individuals in Singapore for residents and non-residents both. We also provide corporate tax compliance & advisory services and accounting & bookkeeping services for businesses & companies in Singapore, so they always pay taxes on time and don’t have to worry about keeping up with documents for Tax Filing. You can contact us via email at admin@bestar.asia or via call at +65 62994730.
