Singapore tax specialist Rikvin has recently published a guide to help gold collar expatriates reduce their income tax liability in Singapore through the Not Ordinarily Resident (NOR) Scheme and the Area Representative Scheme.
The Guide shares valuable information to help expats understand the NOR Scheme, its tax concessions, and why this special status is accorded. It also gives a glimpse of the Area Representative Scheme (AR) and its tax implications.
In general, expatriates in Singapore are taxed according to their length of stay in Singapore. Foreign nationals are considered tax residents if they have worked here for at least 183 days, and are taxed at progressive resident rates (which range from 0% to a ceiling 20% for incomes above S$320,000). Meanwhile, non-tax residents are normally taxed at a flat rate of 15%.
THE NOR SCHEME
The Not Ordinarily Resident Scheme (NOR) scheme is specifically targeted at individuals who do not stay for long periods in Singapore because their jobs require them to frequently travel overseas.
Under the NOR scheme, a qualifying individual employed by a Singapore employer can enjoy one or more tax concessions, such as time apportionment of all income derived in Singapore.
To illustrate, if the total time spent in Singapore is 15 calendar days within a 30-day period, the individual’s chargeable income is computed based on 50% of his income for that period.
Rikvin’s Guide further explains the qualifying criteria for the NOR scheme. To qualify, an individual must be a non-tax resident for the preceding three years of assessment, and in the year of applying for NOR status, must be a tax resident. Once granted, the NOR status is then valid for the next five years of assessment.
AREA REPRESENTATIVE SCHEME
In addition to the NOR Scheme, Singapore also offers an Area Representative (AR) Scheme, which also targets expats who travel frequently and use Singapore as a regional base. However, unlike the NOR, the AR’s employer is a non-resident company, and the income from the foreign employer is credited to the accounts of a permanent establishment in Singapore (e.g. a representative office).
Those who qualify for the AR Scheme also enjoy time apportionment of income. The main difference is that the taxable income for AR differs according to the number of days attributable to work in the city-state in a one-year period.
FAVOURABLE TAX TREATMENT
Expatriates who qualify for either the NOR Scheme or AR Scheme will enjoy favourable tax treatment. The concessions afforded under these schemes will benefit those in higher end of the income bracket in particular.
“Various tax incentives continue to attract and retain global investors to meet the changing demands of individuals and corporations in Singapore. NOR Scheme was introduced by IRAS over a decade ago with the objective of attracting and encouraging young talent to relocate to Singapore,” explained Mr Satish Bakhda, COO of Rikvin.
“The process of applying for NOR status can be intricate, and it is always advisable to consult a tax specialist. Call our office, and we can help you create a simple yet cost-effective personal tax plan,” he concluded.
Read the complete Guide here.
Established in 1998, Rikvin has partnered with thousands of investors, entrepreneurs and professionals who want to work or do business in Singapore. Rikvin’s areas of expertise include company Singapore company registration, accounting, taxation and other related corporate services. Rikvin is also a licensed employment agency and offers a full spectrum of Singapore work visa services for professionals who wish to relocate to Singapore.
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