Singapore is one of the leading nations in the world due to its efficient infrastructure and fast-growing scope of job opportunities, attracting businessmen and employers from different parts of the world to invest and start their own firms there. Many Americans have settled themselves in Singapore due to the nature of work and to have standard forms of living. So, it is especially important for the U.S. expats to understand the American Tax policy in Singapore and it has a noticeably big impact on them.
In Singapore, both residents and nonresidents are applicable to pay taxes, but their rates might be different. Even if an American expat is permanently residing in Singapore, then he or she is required to file U.S. taxes. The applicable tax rates on employment income is 20 % for residents and greater of 15% for nonresidents in Singapore.
The U.S. Tax planning services of Singapore has many reliefs like: –
- Foreign earned income exclusion– It allows an U.S. expat to eliminate a certain amount of income that is earned outside America.
- Foreign housing exclusion or deduction– This includes the elimination of certain amount of household and property expenses for the expats.
- Foreign tax credit– It helps to diminish the foreign taxes paid against American tax obligations.
The American government also has the right to know about the foreign assets held by the expats in Singapore. For that reason, the foreign financial institutions (FFI) comes into action who are responsible for providing genuine data on the expat’s account, then report those data to the internal revenue (IRS) service of the united states federal government and withhold 30% tax on few payments to non-participating financial institutions if the expats do not follow the norms and conditions of the Inland Revenue Authority of Singapore (IRAS). The internal revenue service is the revenue service of the American federal government who is under the immediate direction of the commissioner of the internal revenue service. It is responsible for collecting taxes and provides tax assistance to taxpayers and is extremely helpful in the identification of fraudulent tax filings.
The USA taxation in Singapore also helps to identify the American expats who are living abroad in Singapore and it consists of all the data of the U.S. expats starting from their name, permanent address, residential address, occupation, mobile number and much more as a result of which the illegal immigrants can be easily identified out from them. The foreign account tax compliance act (FATCA) which is associated with the American department of the treasury is responsible for holding all the legitimate information about the foreign assets and identities held by the expats in Singapore and report it to the internal revenue service (IRS).
To understand the USA taxation policy in Singapore, the expats need a clear understanding of the taxes which they are obliged to pay. For that they need experienced tax consultants and specialists who can help them to understand the norms and conditions of the taxation policy in Singapore. Apart from that these tax consultants also help to prevent the process of double taxation among the expats who generally have a misconception to pay the taxes twice due to the lack of proper knowledge.
