Non-resident tax election

Singaporean expats based overseas may find themselves liable for tax in Singapore. For Singapore citizens based overseas, the lapse of non-resident tax election means a potential exposure to Singapore income tax if they travel to Singapore for any business purposes.

The lapse of this administrative concession means that Singaporean expatriates who visit Singapore on business will be subject to Singapore tax for the period they are in Singapore, starting from 1 January 2020 (i.e. Year of Assessment 2021). This would be the case for both individuals employed outside of Singapore and individuals on secondment overseas.

For employers who have Singaporean citizens based overseas and travel to Singapore for business purposes, there is no change to the compliance requirements. As HR teams should be aware, an employer’s year-end form (Form IR8A) is required even for employees based overseas who exercise employment in Singapore (e.g. business trips to Singapore).

From 1 January 2020 onwards, if a Singaporean citizen visits Singapore as part of their overseas employment e.g. business trips, all income attributable to the work days in Singapore must be reflected in Form IR8A. Previously a Singapore citizen could potentially elect to be treated as a non-resident. As a non-resident if they spend 60 days or less exercising employment in Singapore during the calendar year they may qualify to be exempt from Singapore income tax on the earnings attributable to the Singapore days under the short-term employment exemption. Without the non-resident tax election, these employees will no longer be exempt from Singapore tax under the short-term employment exemption.  

This could impact Singapore citizens with high income who travels to Singapore for less than 61 days and were previously exempt from Singapore income tax under the short-term employment exemption.

HR teams will need to consider the implications for their overseas personnel and put mechanisms in place to ensure employees are aware of the changes and all business travel is accurately recorded, so Forms IR8A can be completed error-free.