Recently, I have attended a tax compliance training by Wolters Kluwer. Just to share a snapshot of what I have learnt:
Tax Residency is important that is determined by:
a) Employment Period
b) Physical Presence (where the individual is based)
Under Section 12(4) of the Income Tax Act gains or profits from any employment exercised in Singapore shall be deemed to be derived from Singapore.
Key principles:
- The source of employment income is where the employment is exercised.
- The location of payment of compensation or signing of contracts, or which entity bears the cost of remuneration are irrelevant for Singapore tax purposes in determining the source and taxability of the employment income.
So what is employment exercised in Singapore?
Employment connotes the performance of services. If the services giving rise to the employment income are performed in Singapore - employment exercised in Singapore.
When it comes to compensation, whether we should "provide allowances or reimbursement"..we need to consider the taxation portion in the remuneration package.
Special thanks to Mr Sivakumar Saravan, Director, Tax and Corporate Advisory, Crowe Horwath, for providing an engagement platform during the training.
You can google more at : www.taxsg.com
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