By law, individuals are required to file income tax returns and pay their annual income taxes to the Inland Revenue Authority of Singapore (IRAS). This applies to a majority of full-time employees in the country including Singaporean citizens, Permanent Residents (PRs) and foreigners deriving income in Singapore. 

This year, the COVID-19 pandemic and resulting Circuit Breaker measures in the country have affected many countries across the globe, causing movement restrictions in manpower due to various travel restrictions and guidelines adapted by global companies. 

With the tax filing deadline fast approaching, the following guide outlines some reminders and tax obligations set by IRAS.

Tax obligations for returning Singaporean workers

Singaporeans or PRs returning from work abroad would not be liable for tax on employment income earned from date of arrival up until 30 September 2020 if they meet the following conditions:

• There is no change in their employment terms before and after return to Singapore and 
• their stationing in Singapore is a temporary work arrangement arising from COVID-19. 

Overseas income earned is also not taxable. The 30 September 2020 end date would be subject to review in accordance with the evolving COVID-19 situation.

Tax obligations for foreigners leaving Singapore

Singapore Employers must notify IRAS at least one month before employees either stop working in Singapore or leave the country for more than three months. The tax clearance submission deadline has been extended to 30 June 2020 and any amounts due to the foreign employee must be withheld for settlement of outstanding taxes. Balance of withheld money will then be released after the settlement of any tax owing. 

Foreign employees may leave the company in the meantime but are required to update their contact information with their employers and IRAS.

Tax obligations for foreigners employed overseas working in Singapore for short term assignment

Foreigners on a short term work assignment for an overseas employer in Singapore will be exempted from paying income taxes if they meet the following criteria:

• The period of extended stay in Singapore is less than 60 days and 
• The work performed in Singapore would have rightfully been performed overseas if not for the COVID-19 situation. Foreigners who were unable to leave the country after the end of their short-term assignment may need to work remotely in Singapore. 

For example: if a foreign employee remained in Singapore due to travel restrictions after a short-term assignment that ended on 15 March 2020, their income for completing consecutive unrelated work on an extended staying period of up to 60 days (in this case, up to 15 May 2020) may be eligible for tax exemption. 

Personal Income Tax filing Administration and Deadlines

Individual taxpayers in Singapore are originally required to perform e-filing of their income tax returns by 18 April 2020. The tax filing deadline for personal income tax has been automatically extended to 31 May 2020 in light of the COVID-19 situation.

This year, it is important for individuals and employers to adapt to the new tax procedures and processes affected by the recent Circuit Breaker measures against the COVID-19 pandemic. 

Seeking professional tax advice and assistance can help taxpayers stay on track with the fast-evolving financial regulations in Singapore. Consulting a qualified tax professional such as PWCO is also a good option to maximize tax savings and ease your individual tax filing procedures to ensure full compliance with IRAS requirements.