3 Things to Know About Taxes as a US Expat in Singapore

Singapore is one of the most prosperous nations in the world. It enjoys a rich culture that blends Chinese, Malay and Indian influences.

If you are planning to become a U.S. expat in Singapore, or have been one for a while, it’s important to know the tax laws of Singapore and the potential impact on your U.S. tax return. Expat taxes can be complicated. Fortunately, we have outlined the key points below.

Photo by: Erwin Soo

Taxation in Singapore

Taxation in Singapore is based on whether services were performed in Singapore (regardless of the source of income). Both residents are non-residents are subject to taxes. However, different rates may apply. Foreigners are considered a resident for tax purposes if:

• You were in Singapore for 183 days or more during the year preceding the tax year

The applicable income tax rates are:

• Employment Income (residents): Progressive up to 20%
• Employment Income (non-residents): Greater of 15%, or under progressive rates
• Taxation on Interests: Generally None
• Taxation on Dividends: Generally None (if from a Singaporean company)
• Taxation on Capital Gains: Generally None

Singapore the U.S. do not have a social security tax agreement in-place. Therefore, certain U.S. expats will be required to pay into both social security programs.

How Living in Singapore Impacts US Taxes

As a U.S. citizen or permanent resident (Greencard), you are required to file U.S. taxes even if you live in Singapore. Plus, if you have assets in foreign financial accounts (e.g., foreign banks), there are informational reports you may be required to file. For example, U.S. Expats Living in Singapore with $10,000 or more in foreign banks must file the FBAR (now known as FinCen 114).

Fortunately, the U.S. government provides various forms of tax relief that can lower or eliminate U.S. tax obligations

• The Foreign Earned Income Exclusion – It allows you to exclude a certain amount of income earned outside the U.S.
• The Foreign Housing Exclusion/Deduction – This one relates to additional income that can be excluded for household-related expenses tied to living abroad.
• The Foreign Tax Credit – It allows you to offset foreign taxes paid against U.S. tax obligations.

In most cases, the foreign earned income exclusion is preferable to the foreign tax credit if you live in a country with a lower tax rate than the U.S. (assuming your income is not above the applicable threshold). However, it’s a good idea to speak with an expat tax specialist to discuss the best application of these tax reliefs.

FATCA and Singapore

The U.S. government is increasingly interested in knowing about the foreign assets held by its citizens and residents. As a result, it has been busy inking deals with other countries whereby foreign financial institutions (FFIs) will be required to:

• Identify accounts of U.S. persons;
• Report certain information to the IRS regarding those accounts;
• Withhold a 30% tax on certain payments to non-participating FFIs and account holders unwilling to provide the required information

As of the publication of this article, roughly 100 countries have either signed intergovernmental agreements with the United States or are in discussions. It is important to know that Singapore does have a FATCA agreement in-place with the U.S.

If you have any questions regarding your U.S. expat taxes, contact us today. We are here to help.