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Do you need to pay tax on foreign/overseas income received in Singapore?
Not all foreign income is subject to taxation in Singapore, according to IRAS. Find out in which cases you'll have to file and pay taxes on overseas income.
By Dee Lim
SINGAPORE – As we live in an increasingly global world, it's possible that some of our income can come from international sources. For citizens and residents of Singapore, it's essential to understand whether you need to pay tax on any foreign or overseas income while living here so you can file your income tax accurately.
When is foreign income taxable in Singapore?
Not all foreign income is subject to taxation in Singapore. According to the Inland Revenue Authority of Singapore (IRAS), foreign income is generally not taxable if it is received in Singapore through employment. This includes income deposited into a Singapore bank account.
Additionally, if you are a tax resident and your overseas employment income is already taxed in the foreign country, you may be eligible for tax reliefs or credits.
These are some of the scenarios where you would need to pay tax on overseas income:
If the money you are receiving is through a partnership based in Singapore
If your overseas employment is related to your Singapore employment – you need to travel overseas for a period of time, for example
If you operate a Singapore-based business and have related business or trade transactions overseas
If you work in Singapore for a foreign employer
If you are employed overseas on behalf of the Singapore government
Also read: When do you file your income tax in Singapore (2024)?
Also read: 6 things to note when filing Singapore income tax
Also read: 5 types of taxes we need to pay in Singapore
When do you need to declare and pay tax on overseas income?
The simple answer is that you declare and report your taxable overseas income when you are filing your income tax return. If your overseas income is also taxed in a foreign country, you can apply for possible benefits under a relevant Avoidance of Double Taxation Agreements (DTAs). This is to avoid being taxed twice for the same income, or to pay lesser taxes in total. You will then pay any taxes due in accordance to IRAS' payment schedule for tax.
Do you need to pay tax if you are working overseas for the Singapore government?
For those representing Singapore on foreign shores as government employees, the tax treatments differ: any employment income, including allowances, are taxable in Singapore. It is possible to get a tax remission for overseas cost of living allowances to avoid being taxed on those. You can also find out if there is a DTA between Singapore and the country you are working in, or if there is a provision for reciprocal exemption by Singapore and the foreign government.
How do you report overseas income?
As with any other income tax return you file, reporting income, and overseas income, requires meticulous attention to detail. When you are filing your income tax return, your overseas income will need to be reported under the relevant category like "employment income" if your company is not included in the auto-inclusion scheme, or "trade income", or "other income".
Employers participating in the Auto-Inclusion Scheme will need to transmit the overseas income information to IRAS electronically.
Even when you're working overseas, remember to file your income tax return on time, and to make sure you are making timely payments to avoid any penalties.
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