Taxation of international executives
Are there special residency considerations for short-term assignments?
A non-resident individual, other than a director, exercising an employment in Singapore for not more than 60 days in a calendar year is exempt from tax on income arising from that short-term employment. If possible, it may be beneficial to structure short-term assignment such that the 60-day exemption applies.
Singapore currently has tax treaties with several countries that may provide exemption for dependent services for short-term employment, subject to conditions.
Are there special payroll considerations for short-term assignments?
Tax treaty exemption would generally require that the payroll costs must not be borne by a permanent establishment in Singapore.
What income will be taxed during short-term assignments?
Singapore adopts the territorial basis of assessment whereby an individual is subject to income tax on income derived from or accrued in Singapore. The source of income from employment is generally the place where the employment is exercised regardless of where the contract is made or the remuneration is paid. Therefore, an employee who exercises employment in Singapore will be liable to Singapore income tax on the remuneration (including all benefits, whether in money or otherwise, unless they are specifically exempted from income tax or are covered by an existing administrative concession) payable to him/her for his/her services rendered in Singapore even though the remuneration is paid outside Singapore.
Are there any additional considerations that should be considered before initiating a short-term assignment in Singapore?
Where for certain reasons (e.g. length of assignment, cost-charging arrangements etc.) tax treaty exemption of the employment income in Singapore is not possible, careful planning of the short-term assignment start and end dates may result in tax savings.
Separately, there may be filing requirements to be fulfilled by the employer / employee pursuant to the short-term assignment, notwithstanding that tax-exemption may apply in accordance to the local tax laws or the double-taxation agreement.
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