May 25, 2021

How Investing Can Save Up To 100% Of Your Taxes At The Same Time (for Singapore based Filipinos)

Talk about hitting two birds in one shot!

1. Learn to Invest!

2. Save on Taxes!!

How about 3-in-1?

1.     Learn to Invest!

2.     Save on Taxes!!

3.     Save Time!!! (Do items 1 and 2 All at Once!)

There are lots of different ways to save on one’s taxes legally if you know how to work the system. If you are a Singapore tax resident, you may have access to a lot of tax reliefs available through the government, which you may not be aware of. Generally, a Singapore tax resident is defined as someone who is a:

• Singaporean who normally resides in Singapore except for temporary absences; or

• Singapore Permanent Resident (SPR) who has established a permanent home in Singapore; or

• Foreigner who has stayed / worked in Singapore for 183 days or more in the year before the Year of Assessment.

What I want to focus on this article is the last segment of the population of Singapore tax residents. The bulk of Overseas Filipinos living in Singapore are categorized under this segment so this article is for them. If you are a Filipino but now a Singapore Permanent Resident or a Singaporean, you can potentially avail of more tax reliefs but that will be for another story.

If you live or work in Singapore and have one of the following annual income range listed in the table below, you will see the potential tax savings you can get by availing of some government schemes.

Annual Income Potential Tax Savings
49,750 SGD and below Up to 100%
100,000 SGD Up to 52.78%
150,000 SGD Up to 35.84%
200,000 SGD Up to 24.37%

One of the schemes available through the Singapore government is a voluntary scheme that allows an individual to participate whereby he can invest his monies for retirement and at the same time deduct the amount of capital infused into this scheme from his Total Annual Income such that his chargeable (taxable) income will be reduced.

For example, if you make 50,000 SGD annually and contribute 20,000 SGD into this voluntary scheme then your chargeable (taxable) income becomes 30,000 SGD and not 50,000 SGD. Given this scenario, the higher the income bracket, the bigger the savings in absolute dollar terms even if the percentage may look smaller. Higher income earners pay more taxes so they also save more in absolute dollars.

If you want to learn more about how to implement this into your own personal finance, you may contact us for more details.