Most of us know that IRS stands for the Internal Revenue Service, but did you know that the Singapore equivalent of the IRS is known as IRAS or Inland Revenue Authority of Singapore?
Frequently, new arrivals to Singapore have the following questions:
Computation of Singapore taxes is relatively straightforward if you are a salaried employee working for a company. This is true regardless of where your company is located, what currency you are paid in or whether your salary is paid into a Singapore or a U.S. bank account (or a combination of both).
The first step in filing your Singapore income tax return will be for your company to provide you with a form IR8A (Singapore's more detailed equivalent of the U.S. form W-2). Employers are required to give form IR8A to their employees by March 1st of each year.
By March 31st you should have also received an income tax form from the IRAS (this will be called either form B/B1 or form M). The Singapore income tax form is equivalent to the U.S. form 1040 with one exception: it cannot be reproduced. In other words, you must file the original form sent to you by the IRAS and are not permitted to make a copy of someone else's form or download a blank form from the web.
Once you have these two items, you will see that it is an easy matter to transfer the numbers from your IR8A to your income tax form and mail it to the IRAS by the due date of April 15th. Alternatively, you can file your taxes electronically at http://efile.iras.gov.sg.
No tax is due when your return is filed. After the IRAS have processed your return, they will send you a bill for payment (otherwise known as a Notice of Assessment or NOA). This could come as early as May or as late as October (according to the IRAS).
Once you have received your NOA you then have two choices with respect to making your payment. You can either:
If you choose to pay the balance due over 12 months, you will need to set up a GIRO. The installments will be deducted from your bank account on the 6th of each month from May until April of the following year. IRAS will include a GIRO application form together with your NOA or you can download the form from the IRAS website (http://www.iras.gov.sg.).
The GIRO application generally takes about 2 months to process; therefore, the number of installment payments you make in the first year in which you elect GIRO may be less than 12. Consider this Q&A posted on the IRAS website:
Q: I received my Notice of Assessment in September. If I were to join GIRO, how many installments will I be entitled to?
A: In this example your deduction will commence in November until April of the following year and so you will have 6 installments. For each subsequent year, you will automatically be granted 12 installments.
This concludes Part I of the series: IRS or IRAS: Who's Taxing You Now? Next month's article will deal with how the Singapore taxes which you pay play a role in the filing of your U.S. income tax return.