Taxable & Non-Taxable Income in Singapore: How to Determine Whether Your Income is Taxable

29 March 2025

Editor: ET

To ensure compliance and optimize tax benefits, businesses and individuals in Singapore must accurately track their income sources and understand their tax obligations.

Understanding taxable and non-taxable income is essential for businesses and individuals in Singapore to remain compliant with IRAS tax regulations. Whether you are earning income locally or receiving funds from overseas, knowing what is subject to tax and what is exempt can help you manage your financial obligations effectively.

Further Reading: Top Financial Resolutions for Singapore Businesses and Individuals in 2025

What is Taxable Income in Singapore?

In Singapore, taxable income includes any income that is:

• Accrued in or derived from Singapore

• Received in Singapore from outside the country

For example, profits from a business operated in Singapore are considered Singapore-sourced income and are taxable. The following types of income are also taxable:

• Business Profits: Revenue from trade or business activities

• Investment Income: Dividends, interest, and rental earnings

• Royalties & Property Gains: Revenue from intellectual property or real estate

• Other Revenue Gains: Any other financial gains classified as revenue

Tip: Businesses can claim deductions such as tax-allowable expenses, capital allowances, and reliefs to reduce taxable income and lower their tax liability.

Foreign Income Received in Singapore

Under Section 10(25) of the Income Tax Act 1947, foreign income is considered received in Singapore when it is:🔹 Remitted or brought into Singapore🔹 Used to settle business debts in Singapore🔹 Used to purchase assets that are brought into Singapore

However, if the foreign-sourced income is reinvested overseas without being repatriated to Singapore, its taxation is deferred until it is eventually brought into the country. Additionally, foreign income may qualify for tax reliefs to avoid double taxation.

Exemption: Foreign-sourced income received by Singapore resident individuals (except through a Singapore partnership) is tax-exempt if it benefits the taxpayer.

New Reporting Requirements for Foreign Income (YA 2024 Onwards)

From Year of Assessment (YA) 2024, companies must track and report foreign income received in Singapore. The reporting requirements include:

• Unremitted foreign income carried forward from previous years

• Foreign income earned and received in the financial year

• Expenses incurred on foreign income if applying for tax relief

Companies are encouraged to use IRAS’s Standard Template for tracking foreign income, ensuring accurate tax reporting.

What Income is Not Taxable?

Some income types are not taxable under Singapore law, including:

• Capital Gains: Profits from the sale of fixed assets or capital investments

• Foreign Exchange Gains: Gains from capital transactions

• Income Exempted Under the Income Tax Act:

  • Certain shipping income (Section 13A & 13E)

  • Foreign-sourced dividends and profits (Section 13(8))

  • Gains from the sale of equity investments (Section 13W)

Further Reading: Paying Estimated Tax in Singapore: What Businesses Need to Know

To ensure compliance and optimize tax benefits, businesses and individuals in Singapore must accurately track their income sources and understand their tax obligations. Staying informed about IRAS guidelines, tax reliefs, and reporting requirements can help you avoid penalties and improve financial efficiency.

Need help with tax planning and compliance? Consult a professional tax expert for personalized guidance.