4 Special Tax Schemes of IRAS in Singapore

Special Tax Schemes

The Singapore government offers 4 privileged tax schemes. These schemes aim at providing you with a wide range of tax-related benefits such as tax exemptions, tax deductions, tax relief, tax concessions, and more. Let’s take a look at each of the schemes in detail below:

1. Area Representative Scheme

When you’ve an employment with a foreign company and work out of Singapore location to deliver your duties and meet certain criteria, a portion of your income with respect to the number of days you spent out of Singapore for business-related reasons will not be taxed.

Eligibility Requirement
  • You should have an employment with an employer who is a non-resident.
  • Singapore should be your geographical location.
  • With respect to your employee duties, you will be asked to commute out of Singapore and
  • You get your salary from a foreign employer and not from a Singapore-based permanent establishment.
Learn More About Area Representative Scheme

2. Supplementary Retirement Scheme (SRS)

This voluntary scheme will help you save for your retirement. The savings under this scheme will be in addition to your CPF savings. The contribution you make to this scheme will qualify for tax relief. The investment returns you get via this scheme before withdrawal are not taxable. However, you need to note that half of the withdrawals you make from this scheme will be taxed during your retirement.If you’re a Singapore citizen, Singapore permanent resident, or a foreigner who is earning income (in any form) can make an SRS contribution in the ongoing year. Also, you need to meet the following criteria:

Eligibility Requirement
  • You should be minimum 18 years old.
  • You should not be bankrupt.
  • You should not be diagnosed with any mental disorder and
  • You should be in a position to manage yourself and your duties.
Learn More About Supplementary Tetirement Scheme

Also, you will qualify for SRS tax relief in a YA ( Year of Assessment) post the year in which you made a contribution. In order to qualify for tax relief in that YA, you should be evaluated as a tax resident because if you’re a non-resident, you will not qualify for any kind of tax relief.

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3. Angel Investors Tax Deduction (AITD) Scheme

If you’re looking at investing in one of the start-ups and want to contribute towards the company’s growth via their business networks or management competence, this is one of the incentive schemes you can consider opting for. The validity of this scheme is between 1 March 2010 and 31 March 2020. In case you’ve made an investment prior to or post 24 February 2015, and your investment is assisted by SEEDS Capital (under “Startup SG Equity”), you’ll be eligible for this scheme.

Eligibility Requirement
  • Firstly, you need to submit your application to Enterprise Singapore (manages the AITD) in order to get your approval to be an angel investor.
  • The tax incentive will be provided if you’re an approved angel investor and invested in eligible start-up companies that were established during the period 1 March 2010 to 31 March 2020.
Learn More About Angel Investor Scheme

4. Not Ordinarily Resident (NOR) Scheme

You will qualify for various tax concessions under this scheme. To name a few, you’ll be exempted from paying tax for a portion of your income in relation to the number of days you spent out of Singapore due to business-related purposes, you’ll be exempted from paying tax for any contribution your employer makes to a pension fund (overseas) for 5 continuous years, and many other tax concessions. In order to qualify for a tax concession, you need to first register to get the NOR status. In order to be eligible for the NOR status, you need to meet the below criteria:

Eligibility Requirement
  • You should be a non-resident for the previous 3 years of assessment.
  • You should be a Singapore tax resident in the YA for which you qualify for this status.
Learn More About Not Ordinarily Resident Scheme

On meeting these eligibility criteria, you’ll be granted with the NOR status for 5 successive YAs, beginning from the year of assessment during which you met the criteria initially.

Final Note

Each of these special schemes is beneficial in their own ways. Know which ones you are eligible for and save on your tax up to S$80,000 every year.
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