Expatriate Workers Paying Income Tax to Home Countries for Incomes Derived from Singapore-based Work and Measures to Prevent Tax Revenue Loss

Parliamentary Question by Mr Yip Hon Weng:

To ask the Prime Minister and Minister for Finance (a) whether foreign companies in Singapore can direct expatriate staff to pay income tax to their home countries for incomes derived from Singapore-based work; (b) how does this align with existing avoidance of double taxation agreements which determine an expatriate's tax residency based on qualifying conditions; (c) what is the estimated tax revenue loss arising from expatriates paying their income tax of their home countries; and (d) what measures are in place to prevent such tax revenue loss.

Parliamentary Reply by Second Minister for Finance, Mr Chee Hong Tat:

It is not possible to generalise the tax treatment of an expatriate’s employment income here. It depends on the taxation laws applicable to the expatriate, and the individual’s specific facts and circumstances. Applicable laws would include our income tax law, and may also include the laws of the expatriate’s home jurisdiction, as well as the provisions of any relevant Avoidance of Double Taxation Agreement (“DTA”), which may allocate taxing rights between Singapore and our DTA partner under different scenarios. 

We expect all our treaty partners to abide by the terms of their DTA with Singapore. 

The Inland Revenue Authority of Singapore (“IRAS”) will act on feedback of any action that is not in accordance with our tax laws and the provisions of our DTAs. Affected taxpayers may also approach IRAS for assistance to resolve the issue bilaterally with the treaty partner under the DTA’s dispute resolution facility.