1. The Territorial Advantage
Unlike the US (Citizenship-based) or UK (Arising Basis for Domiciles), Singapore follows a Territorial Basis.
General Rule
You are taxed on:
1. Income accruing in or derived from Singapore.
2. Foreign-sourced income received in Singapore (unless exempt).
The Exemption (Individuals)
Since Jan 1, 2004, all foreign-sourced income received in Singapore by resident individuals is TAX EXEMPT.
*Exception: If received through a partnership in Singapore.
2. The "Double Exemption" Sweet Spot
Why NRE Fixed Deposits are the ultimate asset for SG NRIs.
Section 10(4) of IT Act makes NRE interest tax-free.
Foreign-sourced income exemption for individuals.
Result: 100% Tax-Free Returns (Unlike US/UK/Canada residents)
3. Income Stream Matrix
4. Capital Gains: The "Trading" Risk
Singapore has NO Capital Gains Tax. However, if IRAS deems you a "Trader," your gains are taxed as income.
Selling Indian Property/Stocks
Taxed as Short Term or Long Term Capital Gain in India.
*Subject to "Badges of Trade" test (Frequency, holding period, motive).
Effective Tax on $50k Gain (Long Term)
5. The Calendar Mismatch
Reporting income (if required) can be tricky due to mismatched fiscal years.
- Singapore: Jan 1 - Dec 31 (Year of Assessment is subsequent year)
- India: Apr 1 - Mar 31