Posts Tagged ‘Exemptions’

Who is a Non-Resident?

You are considered a foreign non-resident if you are an individual exercising any profession or vocation in Singapore for less than 183 days in a year under a contract for service.

Non-Resident Tax Exemptions

However, this rule does not apply if you are a director, public entertainer or exercising a profession in Singapore. They are unable to claim for personal relief. For director’s fees and income other than employment, they will be taxed at a flat rate of 20% from Year of Assessment 2005.

They are also exempted from tax on remittances made to Singapore.

Singapore Non Resident Tax Rates

Category

YA 2005 (%)

Employees Remuneration 
Stay in Singapore  more than 60 days but less than 183 days Stay Less than  60 days

15.0
Exempt

Entertainer Income

15.0

Other Taxable Income

20.0

Capital Gains Tax

None

Royalty  Note: *10% effective 1 Jan 2005

15.0 *

Copyright

2.0

Directors’ Remuneration

20.0

Interest

15.0

Management Fees

20.0

Professional Fees

15.0

International Arbitrators Fees

0.0

FAQs Singapore Non-Resident Tax

Q: I am engaged by a foreign consulting firm to render my services in Singapore. Will my consultation fees be taxed in Singapore if the fees are paid to me outside Singapore?

A: Yes. You are liable to pay Singapore tax for the professional services rendered in Singapore. It does not matter where you are paid.

Q: I am invited by a government body/Ministry in Singapore to conduct seminars/workshops in Singapore. Is my income taxable?

A: You will be taxed on the income derived from Singapore unless it is exempted from tax.

Q: I am a visiting professional. Will I be exempt from tax if I render my services for not more than 60 days in the calendar year in Singapore?

A: The tax exemption for short-term employment of 60 days or less does not apply to visiting non-resident professionals who exercise their profession in Singapore. Only visiting non-resident professionals who are employees would qualify for the exemption.

Q: My engagement in Singapore as a visiting professional spreads over 5 months. My home country has a tax treaty with Singapore. Do I still need to pay tax in Singapore?

A: Whether you need to pay tax in Singapore would depend on the provisions of the tax treaty. For example, under the tax treaty between Singapore and United Kingdom, the income derived by you from Singapore will be tax exempt provided that you do not have a fixed base regularly available to you in Singapore for the purpose of performing your activities; or that you are not present in Singapore for not more than 183 days in any period of 12 months commencing or ending in the fiscal year concerned.

AsiaBiz is a one-stop corporate solution for all your Singapore Company Registration and immigration requirements. Our mission is to facilitate our clients to breeze through all their corporate needs from the incorporation process, accounting, tax and Singapore immigration services.

The Internal Revenue Service released a memorandum on June 19, 2009, clarifying the rules governing non-custodial parentâ??s ability to claim a dependency exemption for their child.

Previously, the Service allowed a non-custodial parent to claim an exemption for a child if the custodial parent signed a written declaration releasing claim to the exemption and the non-custodial parent attached that declaration to their return. IRS Form 8332 is available to document this release.  In Publication 501, Exemptions, Standard Deduction, and Filing Information, the Service has stated that a non-custodial parent may attach certain pages of a divorce decree or separation agreement, instead of Form 8332, if the attached pages include the information required on the form.

A problem arose in the ambiguous language of the actual code.  It stated the release of a claim must be on Form 8332 or, if not on such form, must â??conform to the substance of such form.â? The ambiguity begat creativity and family law attorneys began drafting the declarations into settlement agreements. Taxpayers would then simply need to attach a copy of their divorce decree. This eliminated the need for Form 8332 and therefore, the need to speak to your ex-spouse every year requesting a signature.

The recent memorandum was directed specifically at the question whether it was allowable for a non-custodial parent to prove their right to the exemption by submitting proof of satisfaction of a condition in a divorce decree. The condition was that the non-custodial parent may only claim the exemption if current in his or her support obligation. This raises the problem of substantiation.

In the June 19 memo, the Service concluded the release must be on Form 8332 or must be a document conforming to the substance of Form 8332 and has as its only purpose the release of a claim to exemption. A divorce decree, separation agreement or parenting plan allowing a non-custodial parent to claim an exemption for a child, only if a condition is met, does not conform to the substance of Form 8332.  For tax years beginning after July 2, 2008, a settlement agreement, decree or judgment may not be used by a non-custodial parent to substantiate a dependency exemption for a child, even if accompanied by a statement intending to show the condition in the decree or agreement was met.

These regulations reflect the Serviceâ??s concern about substantiating a claim to a dependency exemption for a child and are intended to avoid problems of proof, minimize controversy, and minimize costs to parents.  The change does not preclude a non-custodial parent from claiming the exemption; it simply requires more care be made to make sure this is accomplished.

It may be helpful to include language stipulating the custodial parent will execute Form 8332 on a yearly basis. This follow up challenge can be alleviated by insuring the newly single parents consult a financial advisor with specific experience in the field of divorce financial planning. Two parents claiming an exemption for the same child will end in IRS audits for both and possibly bring a settled case back into the courtroom.  The Service has clearly stated it is not permissible to include any language that could require substantiation.

www.pacdivorce.com

Our firm does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences.