A comprehensive guide for taxpayers in Singapore to understand the flat 15% tax rule for non-residents, when it applies, and how it compares to the progressive tax rates.
📌 Understanding Non-Resident Taxation in Singapore
Singapore taxes individuals based on their tax residency status. If you are a non-resident—meaning you stayed or worked in Singapore for fewer than 183 days in a calendar year—you are generally taxed at a flat rate of 24% on your local-sourced income.
However, there is a special provision for certain employment income earned by non-residents, allowing them to be taxed at a lower 15% flat rate or at resident progressive rates, whichever results in a higher tax amount.
🛡️ When Does the 15% Rule Apply?
The 15% flat tax rate applies to employment income earned by non-resident individuals, but with important conditions:
- Income must be from employment exercised in Singapore.
- The taxpayer must be a non-resident under the 183-day rule.
- The income does not include director’s fees, consultancy fees, or other special categories taxed separately.
This concession is meant to provide a fairer tax treatment for short-term foreign employees in Singapore.
💼 How It Works – 15% vs. Progressive Rates
For qualifying non-resident employees, IRAS will compute tax payable under both methods:
- Flat 15% rate on total employment income.
- Progressive resident rates with personal reliefs (if applicable).
You will pay the higher of the two amounts, ensuring fairness while preventing under-taxation.
📊 Example Calculation
Assume a non-resident earns SGD 60,000 in Singapore:
- Flat 15% method: 60,000 × 15% = SGD 9,000
- Progressive method (no reliefs):
- First 20,000 @ 0% = 0
- Next 10,000 @ 2% = 200
- Next 10,000 @ 3.5% = 350
- Next 20,000 @ 7% = 1,400
Since SGD 9,000 (flat 15%) is higher than SGD 1,950 (progressive), the taxpayer pays SGD 9,000.
🚫 Income Not Eligible for the 15% Rate
The flat 15% rate does not apply to:
- Director’s fees (taxed at flat 24%)
- Consultancy fees or professional income (taxed at flat 24%)
- Other non-employment income such as rental or investment income
💡 Tax Planning Tips for Non-Residents
- Track your days of presence in Singapore to determine residency status.
- Negotiate salary packages with awareness of the 15% rule.
- Where possible, structure your work period to exceed 183 days to qualify as a resident for progressive rates and reliefs.
- Keep accurate records of contracts and payment dates.
Become Our Featured Tax Expert.
This premium ad space is reserved for one tax professional. Put your firm in the spotlight and reach qualified Singapore leads directly.
To claim this exclusive spot, contact us at [email protected].
📢 Final Thoughts
The flat 15% tax rate for non-residents in Singapore is a key provision that impacts short-term foreign employees. While it offers a simplified method of taxation, it is not always the cheaper option compared to progressive rates.
Always calculate both methods to understand which one IRAS will apply, and plan your employment period strategically to optimise your tax position.
