Living as a US expatriate in Singapore presents a unique set of challenges, especially when it comes to understanding and navigating the tax system. The country’s tax-friendly environment for corporations, featuring a flat corporate tax rate, makes it particularly attractive for business owners and individuals engaging in business operations.
This guide aims to provide a comprehensive overview of the tax obligations for US expats living in Singapore, helping you to better understand your responsibilities and potentially avoid any tax pitfalls related to rental income, employment income, business profits, and more.
UNDERSTANDING TAX RESPONSIBILITIES FOR US EXPATS IN SINGAPORE
The US has a citizenship-based taxation system which means US expats must file a federal income tax return and report their worldwide income annually once their taxable income exceeds the filing threshold regardless of where they reside.
Singapore’s tax system, on the other hand, is territorial, meaning only income earned within the country is subject to tax. Tax obligations in Singapore are determined by one’s tax residency status. Non-resident individuals are only taxed on income earned within Singapore.
HERE’S A QUICK GLANCE AT SOME KEY FACTS:
Algirdas Semeta, EU’s Commissioner for Tax wants Australian PM to use G20 Presidency to lean on Asia-Pacific financial centres to reduce bank secrecy & share tax information.
In an exclusive in today’s Australian Financial Review, journalist Geoff Winestock reports that Commissioner Semeta (who is currently in Australia) wants Prime Minister Abbott to convince Singapore, HK, Taiwan & Macau to reduce their bank secrecy provisions and to share tax information with other authorities. Commissioner Semeta is due to meet today with Australia’s Treasurer Joe Hockey and the two are likely to discuss protection of the tax base against multinationals that shift profits to offshore financial centres.
Commissioner Semeta said “Australia could find a way to get all these countries on board”. Read More
We previously posted “FATCA: Updates for Hong Kong, Philippines, New Zealand and Singapore” where we discussed FATCA Updates for Asia and Singapore’s media release last May 14th, where it indicated its intent to enter into an intergovernmental agreement (IGA) with the United States.
The United States is coming close to sealing a Foreign Account Tax Compliance Act (FATCA) deal with Singapore following a meeting with the country’s Deputy Prime Minister Tharman Shanmugaratnam. The bilateral discussions for the inter-governmental agreement are reported to be moving forward smoothly.
The deal would help to clamp down on US citizens avoiding tax through keeping finances in Read More
In August 19, 2013, the Hong Kong Monetary Authority (HKMA) released a circular directing financial institutions to ensure compliance by establishing the necessary processes and controls, if applicable. HKMA also suggested that the Hong Kong Association of Banks and the DTC Association offer appropriate assistance to facilitate the development of good practices for compliance with FATCA and other overseas tax regimes. There is no explicit mention of a potential IGA with the U.S. (Source: HKMA)
Bangko Sentral ng Pilipinas (BSP), in a memorandum, reminds financial institutions – including commercial and investment banks – to evaluate if they are Foreign Financial Institutions (FFIs) subject to FATCA, to study the potential effects of FATCA on their businesses, and determine the steps to take to avoid the unfavorable consequences of non-compliance. And if they are subject to FATCA compliance, the institution must put in place a policy to comply. The BSP message states that any FATCA-related questions or concerns of banks should be provided to the Association of Bank Compliance Officers, Inc. (ABCOMP) which serves as the central repository of FATCA-related inquiries and collate such queries for a more systematic submission to the U.S. Government. There is no explicit mention of a potential IGA with the U.S. (Source: BSP)
In a media release last May 14th, Singapore has indicated its intent to enter into an intergovernmental agreement (IGA) with the U.S., a move which will help financial institutions operating in the city-state comply with the U.S. Foreign Account Tax Compliance Act (FATCA). (Source: IRAS) Read More