Everything you need to know about self-employed income tax in Singapore – how to calculate, report, and minimise your tax while staying compliant with IRAS requirements.
📌 Who Is Considered Self-Employed in Singapore?
The Inland Revenue Authority of Singapore (IRAS) defines self-employed individuals as those who earn income from running their own trade, business, profession, or vocation. This includes:
- Sole proprietors and partners in a partnership
- Freelancers and gig economy workers
- Independent contractors
- Commission-based agents
If you are self-employed, you must declare your business income under the “Trade, Business, Profession or Vocation” section of your tax return.
💼 How Is Self-Employed Income Taxed?
Self-employed income is taxed as part of your personal income tax. The net profit from your business is added to any other sources of income and taxed at the applicable progressive resident tax rates.
Net profit is calculated as:
Net Profit = Gross Business Income – Allowable Business Expenses
You are required to keep proper records of all income and expenses for at least 5 years for IRAS inspection.
🧾 Common Allowable Business Expenses
You can deduct certain expenses incurred in the production of income. Common deductible expenses include:
- Office rent and utilities
- Business travel expenses
- Advertising and marketing costs
- Professional fees (e.g., accounting, legal)
- Equipment depreciation
- Employee salaries and CPF contributions
Personal expenses or capital expenses not related to income generation are not deductible.
📊 Example Tax Calculation
Suppose your annual gross business income is SGD 100,000 and your allowable expenses are SGD 30,000.
- Gross Income: SGD 100,000
- Less Allowable Expenses: SGD 30,000
- Net Profit = SGD 70,000
This SGD 70,000 is added to your other taxable income and taxed based on the resident progressive tax rates.
🛠️ Tax Filing for the Self-Employed
As a self-employed individual, you must:
- Maintain proper accounting records (invoices, receipts, bank statements).
- Report your business income using Form B or via myTax Portal.
- File your tax return by 15 April (paper) or 18 April (e-filing).
If your gross income exceeds SGD 1 million, you may be subject to GST registration requirements.
💡 Tax Planning Tips for Self-Employed Individuals
- Set aside a percentage of income for tax payments to avoid cash flow issues.
- Maximise allowable deductions to lower taxable income.
- Consider making voluntary CPF contributions for retirement and tax relief.
- Use accounting software to simplify record keeping and compliance.
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📅 Key Takeaways
Being self-employed in Singapore offers flexibility but also comes with tax responsibilities. Understanding business income tax rules helps you stay compliant and optimise your earnings.
By tracking income accurately, claiming allowable expenses, and planning ahead for tax payments, you can avoid IRAS penalties and make your self-employed journey financially sustainable.
