Singapore

*Updated July 2020*

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• Legal system
• Inheritance and succession
• Estate planning
• Taxation
• Residence and domicile
• Other relevant information

Legal system

Singapore’s legal system evolved from the English system and includes common-law principles. Sources of law originate from the Constitution of Singapore, statutes, subsidiary legislation and case law. Shari’a law is recognised in religious, matrimonial and succession matters for Muslims who are domiciled in Singapore.

Singapore’s legislation and courts place high emphasis on international co-operation, as Singapore recognises that its national interests are aligned with international interests within a framework defined by the rule of law.

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Inheritance and succession

Succession

Singapore’s succession laws are broadly based on English common-law principles and legislation. Forced heirship does not apply, there is generally full testamentary freedom, except in relation to Singapore-domiciled Muslims.

Family law and defined inheritance rules

A non-Muslim person who is domiciled in Singapore is free to dispose of property in their estate by will. A Muslim can only make a will in respect of not more than one-third of their net estate and only in favour of persons who are not otherwise entitled to share in the net estate in accordance with Faraid (Muslim inheritance law).

The Intestate Succession Act (the ISA) governs the distribution of property of an intestate deceased who is not a Muslim. The ISA provides that if a person died intestate and was, at the time of death, domiciled in Singapore with property (whether movable or immovable) in Singapore or was, at the time of death, domiciled outside Singapore but has immovable property in Singapore, then these properties or their sale proceeds, after payment of the expenses or debts are to be distributed in accordance with the ISA.

Under the ISA, the estate of the intestate deceased is to be distributed to the deceased’s kin or relation ranked in the following order:

• Deceased’s spouse and issue.
• Deceased’s parents.
• Deceased’s brothers and sisters or, if the brothers and sisters are deceased, their children.
• Deceased’s grandparents.
• Deceased’s uncles and aunts.

If the deceased died leaving no kin or relation who is entitled to benefit, the estate will be distributed to the Singapore government.

The Inheritance (Family Provision) Act provides that, where a non-Muslim person dies domiciled in Singapore leaving dependants, the court may order that such reasonable provision as the court thinks fit shall, subject to such conditions or restrictions, if any, as the court may impose, be made out of the deceased’s net estate for the maintenance of those dependants.

The estate of a Muslim must be distributed in accordance with Islamic inheritance laws. Part VII of the Administration of Muslim Law Act (the AMLA) governs the distribution of Muslim estates.

Family law is comprised in two main statutes:

• the Women’s Charter, which provides for the formation of marriages, the rights and duties of married persons, the protection of family, the maintenance of wives and children, and separation and divorce; and
• the AMLA, which provides for the registration of Muslim marriages and the establishment of a Shari'a Court to deal with Muslim divorces and other ancillary matters.

Under s.112(10) of the Women's Charter, matrimonial assets which are to be divided in the event of a breakdown of the marriage means 

• any asset acquired by one or both parties before the marriage but was used or enjoyed by the spouse / family or was substantially improved upon by the spouse; and
• any asset acquired during the marriage.

Matrimonial assets exclude third-party gifts or inheritance unless it is the matrimonial home or has been substantially improved by the spouse during the marriage. The Singapore courts take a structured approach in the division of matrimonial assets, taking into account various factors as set out in s.112(2) of the Women's Charter, including the extent of financial contributions towards the assets, the extent of non-financial contributions towards the welfare of the family, debt owed, the needs of the children (if any), any agreements between the parties as to the ownership and division of the matrimonial assets made in contemplation of divorce. The courts will derive the ratio of both parties' direct financial contribution and the ratio of both parties' indirect contributions, then allocating the appropriate weightage to be allocated to each of this ratio, ascertain the average percentage contributions and hence percentage division of the matrimonial assets (see ANJ v ANK [2015] 4 SLR 1043; TNL v TNK [2017] SGCA 15). This structured approach is applied in most cases, although the courts have recently noted its limits in relation to single-income marriages and highlighted the overarching objective of achieving a 'just and equitable division' (see UQP v UQQ [2019] 4 SLR 1415).

Probate process

Save for specific assets, the estate of a deceased may only be dealt with by one or more persons who have been granted probate or letters of administration by the court.

The Central Provident Fund (CPF) is a comprehensive social security savings plan administered by the Singapore government. Contributions made to the CPF and death benefits payable under any insurance scheme administered by the CPF Board will be distributed to the nominees specified by the deceased in the prescribed nomination form lodged with the CPF Board, without the need for a Grant of Probate or grant of letters of administration.

Proceeds of certain insurance policies may also devolve upon beneficiaries nominated in the relevant policies. This is because a statutory trust comes into being pursuant to s.73 of the Conveyancing and Law of Property Act and/or s.49L of the Insurance Act. As such, the entitlement to these proceeds is independent of intestacy rules or the provisions in the will of the deceased.

The title to real estate held jointly by owners as joint tenants will usually pass to the surviving owner(s), independent of the intestacy rules or the provisions in the will of the deceased. This is subject to any presumption of resulting trust and/or presumption of advancement that may apply.

In contrast, the designated share of the real estate held by owners as tenants-in-common forms part of the owner’s estate and devolves in accordance with the will or intestacy law.

With regards to any bank account maintained in joint names, to determine whether the surviving account holder is entitled to all money/investment in such accounts, the Singapore courts will first seek to ascertain the clear intention of the deceased to give the money in the joint account to the joint account holder. If there was no clear intention, then the presumption of resulting trust or the presumption of advancement could be applied. The burden of proof lies with the joint account holder to show that the deceased's intention was to give the proceeds to them. In discharging the burden of proof, the bank documents might have strong evidential value, but do not have legal presumptive value.

The Probate and Administration Act sets out the basis upon which an application for Grant of Probate and letters of administration may be brought. Letters of administration are granted by the court if a person dies intestate or if no executor has been appointed by will (or no such appointed executor is able to act). The court, in granting the letters of administration, has regard to the rights of all persons interested in the estate of the deceased or the proceeds of sale of the estate. Letters of administration may be granted to the spouse of the deceased or the deceased’s next of kin, or, where no such person applies, the creditor of the deceased. The court will grant probate of the estate of the deceased if the deceased dies leaving a valid will with the appointment of executor(s). If the deceased was a Muslim, a certificate of inheritance (Sijil Warisan) has to be obtained from the Syariah (Shari'a) court before an application for letters of administration is filed. The certificate of inheritance specifies the precise shares of the beneficiaries to the estate.

Mental capacity

Under s.4 of the Mental Capacity Act (the MCA) a person lacks mental capacity if at the material time, they are unable to make a decision for themselves in relation to the matter because of an impairment of, or a disturbance in the functioning of, the mind or brain, regardless whether such impairment is permanent or temporary. Section 5 of the MCA provides that a person is unable to make a decision for themselves if they are unable: 

• to understand the information relevant to the decision;
• to retain that information;
• to use or weigh that information as part of the process of making the decision; or
• to communicate their decision (whether by talking, using sign language or any other means).

This does not include persons who are able to understand explanations given to them in a way that is appropriate to their circumstances, such as using simple language, visual aids or other means. The MCA allows a person to make a lasting power of attorney to appoint donees to act and make decisions on their behalf when they lack mental capacity; allows the court to appoint a deputy to act and make decisions (including investment decision) on behalf of a person who lacks mental capacity; gives legal protection for acts done by a person in relation to the care and treatment of another person who lacks mental capacity if certain conditions are met and provides safeguards to protect persons who lack mental capacity. The Criminal Law Reform Act has recently on 1 January 2020 doubled the maximum sentences for offences involving the ill-treatment of persons lacking capacity by their donees or deputies.

Estate planning

Use of trusts in estate planning

Singapore trust law is based substantially upon English trust principles, which require the three certainties (of intention, objects and subjects) in order to constitute a valid trust. Singapore trusts have a perpetuity period of 100 years. A trust does not have separate legal personality (cf. a company). Trusts are commonly and effectively used in estate planning. The validity and operation of trusts are not affected by succession and forced heirship rules in Singapore. Trust assets in an inter vivos trust do not require a Grant of Probate or letters of administration and hence maintaining the privacy as to asset ownership. This is in addition to the usual advantages of protection against claims by creditors or third parties.

In Shafeeg bin Salim Talib v Fatimah bte Bud bin Talib [2010] SGCA 11, the Court of Appeal of Singapore has opined that if the settlement of the assets into the trust were completed during the deceased's lifetime, such assets will be treated as trust assets and not part of the estate and effects of the Muslim which would be subject to the application of Syariah (Shari'a) succession laws. In relation to foreign persons who are subject to forced heirship rules elsewhere, the effects of such forced heirship rules may be mitigated through the use of a Singapore law trust.

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Use of foundations in estate planning

Singapore has a common-law-based system which recognises trusts, but does not have a tradition of using foundations, which are mainly a civil-law construct.

Types of entities

See the table below.

Sole Proprietorship	Partnership	Limited Partnership (LP)	Limited Liability Partnership (LLP)	Company	VARIABLE CAPITAL COMPANY (VCC)
A business owned by an individual: simplest structure, but does not have the benefits of limitation of liability.	An association between two or more persons carrying on a business in common with a view to profit. Minimum of two partners up to a maximum of 20. Individuals or corporate bodies can be partners.	A partnership between two or more partners, with at least one general partner and one limited partner. Minimum of two partners with no maximum limit. Individuals or corporate bodies can be partners.	A partnership between two or more partners with limited liability. Minimum of two partners with no maximum limit. Individuals or corporate bodies can be partners.	A business structure that has a separate legal personality from its members and directors. Companies may be public companies (no restriction on the number of members and may be listed on stock exchanges) and private companies (which may be limited by shares or guarantees and may not have more than 50 members). Exempt private companies are companies with no more than 20 members and no corporation as its members. Its annual revenue must not be more than SGD5 million.	A corporate structure for investment funds, which provides flexibility in the issuance and redemption of its shares as well as in allowing dividends to be paid out of capital. A VCC can be set up as a single standalone fund or as an umbrella fund with two or more sub-funds, each holding a segregated portfolio of assets and liabilities. Minimum of one member with no maximum limit.
Business Registration Act (Cap 32)	Partnership Act (Cap 391) and Business Registration Act (Cap 32)	Limited Partnerships Act (Cap 163B)	Limited Liability Partnership Act (Cap 163A)	Companies Act (Cap 50)	Variable Capital Companies Act 2018 (No 44 of 2018)

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Taxation

Income tax system

Singapore has a territorial income tax system. Only income actually or deemed to be accruing or derived from Singapore, or income actually or deemed to be derived overseas and received in Singapore, is subject to tax.

Personal income tax rates

A resident individual taxpayer is taxed at a graduated marginal tax rate (0 per cent to 22 per cent) depending on the quantum of chargeable income. Singapore has a preceding year basis of taxation i.e. income earned in 2018 is taxed in the year of assessment (YA) 2019.

Corporate income tax rates

The prevailing corporate tax rate is 17 per cent.

A partial tax exemption is given to companies in relation to its chargeable income subject to tax at the prevailing corporate tax rate. For the YAs from 2010 to 2019, up to SGD152,500 of the chargeable income of the company is exempted from tax. For the YA 2020 or later, up to SGD102,500 of the chargeable income of the company is exempted from tax.

A newly incorporated Singapore company may enjoy tax exemption as a start-up for each of its first three consecutive years of assessment. To qualify for this tax exemption as a start-up company, it must:

• be incorporated in Singapore;
• be a tax resident in Singapore for that YA;
• have no more than 20 shareholders;
• have at least one individual shareholder holding at least 10 per cent of the total number of issued ordinary shares or all shareholders are individuals beneficially and directly holding the shares in their own names;
• not have investment holding as a principal activity or developing immovable properties for sale and/or investment as a principal activity; and
• be set up for bona fide entrepreneurial and commercial reasons.

Where any of the first three YAs of the new start-up company falls in YA 2010 to 2019, an amount of up to SGD200,000 of the chargeable income of the start-up company is exempt from tax. Where any of the first three YAs of the new start-up company falls in of after YA 2020, an amount of up to SGD125,000 of the chargeable income of the start-up company is exempt from tax.

The tax exemption scheme for new start-up companies may be extended to companies limited by guarantee, subject to conditions.

Capital gains tax

There is no capital gains tax in Singapore. Whether a gain on disposal of an asset is capital in nature (not taxable) or income in nature (taxable), depends on the facts and circumstances of each case. The test is broadly based on what has developed in case law known as the ‘badges of trade’, which include the intention at the time of acquisition, length of period of ownership of the asset disposed, frequency of similar transactions, nature of the asset and improvements made (if any), means of financing the acquisition and the circumstances of the disposal.

Non-residents taxable on

A non-resident individual is liable to Singapore tax only in respect of taxable income sourced in Singapore.

A non-resident company is subject to tax in Singapore on income accruing in or derived from Singapore, or received in Singapore from outside Singapore, unless conditions for exemption are fulfilled.

Withholding tax rate (non-treaty)

Generally, withholding tax rate of 15 per cent and 10 per cent respectively are imposed on interest and royalties paid to non-residents. For certain payments such as technical assistance and management fees, the withholding tax rate is the prevailing corporate rate of (17 per cent), unless the services are performed outside Singapore. Singapore does not tax dividends in the hands of the shareholders as it has a single-tier corporate system. Singapore also does not levy a separate withholding tax on dividends.

Withholding tax rate (treaty)

The withholding tax rates imposed on interest and royalties may be reduced under the terms of a double-taxation agreement concluded by Singapore with its treaty partners. Singapore does not tax dividends in the hands of the shareholders as it has a single-tier corporate system. Singapore also does not levy a separate withholding tax on dividends.

Taxation at death

Singapore does not have estate or inheritance tax.

Other taxes

Stamp duties: Stamp duty is generally payable on the transfer of Singapore immoveable properties (about 4 per cent) or Singapore shares (0.2 per cent) on the price or market value, whichever is higher. This includes dutiable property, which is gifted or transferred to a trust. The responsibility to pay rests on the buyer, unless the liability is contractually shifted to the seller.

Properties distributed in accordance to the will or intestacy rules are not subject to stamp duty. Transfers not chargeable with stamp duty include:

• transfers made as security for a loan;
• transfers appointing a new trustee; and
• transfers where no beneficial interest passes on to a beneficiary.

With effect from 6 July 2018, the additional buyer’s stamp duty (ABSD) for Singapore citizens and permanent residents buying a second or subsequent residential property or for foreigners or entities buying residential property was raised by 5 per cent across the board. For housing developers buying residential property, a further 5 per cent of ABSD is applicable.

The ABSD ranges as follows: 5 per cent (for permanent residents buying a first residential property); from 12 per cent to 15 per cent (for Singapore citizens and permanent residents buying a second or subsequent residential property, depending on the number of residential properties already owned); 20 per cent for foreigners; and 25 per cent for entities.

Seller’s stamp duty (SSD) is payable for residential properties which were acquired on or after 14 January 2011 and disposed of within four years of acquisition (for residential properties acquired between 14 January 2011 and 10 March 2017) or within three years of acquisition (for residential properties acquired on or after 11 March 2017). SSD ranges from 4 per cent to 16 per cent, depending on the period of holding and the exact date of acquisition. For residential properties acquired on and after 11 March 2017, no SSD is payable for disposal of residential property held for more than three years.

SSD on industrial property is imposed on the seller for any industrial property acquired on or after 12 January 2013 and disposed of within three years, ranging from 5 per cent to 15 per cent, depending on the period of holding

Additional conveyance duties (ACDs) apply to the sale of equity interests in property-holding entities (PHEs) owning directly or indirectly residential properties in Singapore comprising at least 50 per cent of its total tangible assets by significant owners, or persons who become one after the purchase. In addition to the existing stamp duty on shares (0.2 per cent), ACDs will apply to the buyer on qualifying transfer of equity interests of PHEs at the existing buyer’s stamp duty of about 4 per cent and ABSD of 30 per cent. Where the seller disposes of equity interests acquired within three years on or after 11 March 2017, an SSD of 12 per cent (flat rate) applies. On 11 April 2018, the Stamp Duties (Agreements for Sale of Equity Interests) (Remission) Rules 2018 came into operation, providing for three class remissions: the remission of stamp duty on agreements for the sale of stock or shares not subject to the ACD; the remission of stamp duty on agreements for the sale of book-entry securities subject to ACD; and the remission of stamp duty for aborted agreements.

Property tax: With effect from 1 January 2015, residential properties are subject to graduated tax rates ranging from 0 per cent to 20 per cent, depending on whether they are owner-occupied. Non-residential properties will continue to be taxed at a flat rate of 10 per cent. Property tax is based on the annual value, which is the estimated rental value of the property, excluding furniture, fittings and maintenance fees.

Goods and services tax (GST): Singapore imposes GST at 7 per cent for standard-rated taxable supplies, and 0 per cent for international supplies.

Tax treaties

Eighty-eight comprehensive tax treaties covering all types of income are in force, including Albania, Australia, Austria, Bahrain, Bangladesh, Barbados, Belarus, Belgium, Brunei, Bulgaria, Cambodia, Canada, China, Cyprus, the Czech Republic, Denmark, Ecuador, Egypt, Estonia, Ethiopia, Fiji, Finland, France, Georgia, Germany, Ghana, Guernsey, Hungary, India, Indonesia, Ireland, the Isle of Man, Israel, Italy, Japan, Jersey, Kazakhstan, Kuwait, Laos, Latvia, Libya, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Mongolia, Morocco, Myanmar, the Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Panama, Papua New Guinea, Philippines, Poland, Portugal, Qatar, Romania, Russia, Rwanda, San Marino, Saudi Arabia, Seychelles, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Tunisia, Turkey, Turkmenistan Ukraine, United Arab Emirates, the UK, Uruguay, Uzbekistan and Vietnam.

There are eight limited tax treaties covering shipping and/or air transport, which include Brazil, Hong Kong and the US.

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Residence and domicile

Special rules on becoming resident

Generally, an individual will be regarded as a tax resident of Singapore if they are physically present in Singapore for at least 183 days in the calendar year preceding the YA. A company is regarded as tax resident in Singapore if the management and control of its business is exercised in Singapore.

Special rules on ceasing residence

NOT APPLICABLE

Domicile concept for gifts and inheritance

Singapore does not have gift or inheritance tax. The domicile of an individual at the time of death may govern the devolution of property. The devolution of immovable property is, however, generally governed by the lex situs in accordance with conflict of laws principles.

Taxation of holdings by non-residents on death and of gifts

• Gifts: NOT APPLICABLE
• Death: NOT APPLICABLE

Reporting/auditing requirements

No. 

Tax returns are made under self-assessment and it is the taxpayer's responsibility to report and to assess liability or claim for relief.

Limited companies and LLPs are generally subject to statutory audit requirements, except in the case of exempt companies and small companies. A private company qualifies as a small company if it meets at least two or three following criteria for the immediate past two consecutive financial years: (a) total asset revenue of less than or equal to SGD10 million; (b) total assets of less than or equal to SGD10 million; (c) 50 or fewer employees.

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Other relevant information

Asset protection laws

No.

Foreign currency restrictions

No.

Foreign ownership restrictions

Yes. Generally no restrictions on corporate ownership; however, the Companies Act mandates that every company have at least one director who is ordinarily resident in Singapore.

Generally no restrictions on ownership of commercial and industrial property. Under the Residential Property Act, foreign persons may only own non-restricted residential property, such as units of flats, condominiums, strata landed houses in approved condominium developments and leasehold estates. A foreign person who wishes to own restricted residential property, including vacant residential land and landed property (detached houses, semi-detached houses, terrace houses, linked houses and townhouses) must first obtain the prior approval of the Minister of Law. A foreign person is defined in the Residential Property Act as any person who is not a Singapore citizen, Singapore company, Singapore LLP or a Singapore society.

AML/due diligence and other requirements and regulatory procedures for advisors

The main legal sources of Singapore’s regime to prevent money laundering and the financing of terrorism are contained in the Corruption, Drug Trafficking and other Serious Crime (Confiscation of Benefits) Act (the CDSA), the Terrorism (Suppression of Financing) Act (the TSFA), and the United Nations Act (the UN Act) and its various regulations. These provisions are of general application that apply to all persons in Singapore.

The CDSA provides for the confiscation of benefits derived from corruption, drug dealing and other serious offences. Serious offences are defined to include a myriad of offences and the conspiracy, incitement, attempt, aiding, abetting, counselling or procuring the commitment of such offences. Notably, serious offences include breaches of the TSFA and the UN Act and the relevant legislation, regulations relating to suppression of financing of terrorism, money laundering and tax (both income tax and GST Tax) evasion and/or fraud.

Additionally, the Monetary Authority of Singapore regularly issues directions, regulations, notices and guidelines under the Monetary Authority of Singapore Act to banks, merchant banks, money changers, finance companies, life insurers, financial advisors, capital markets services licensees, approved trustees and trust companies, relating to the prevention of money laundering and the financing of terrorism.

Personal data protection

The Personal Data Protection Act 2012 (the PDPA) entered into force over 2013 and 2014, and governs the collection, use and disclosure of personal data in Singapore. Under the PDPA, organisations must meet nine main obligations when collecting, using and disclosing personal data. Primarily, the individual must consent to collection, use and disclosure of their personal data. 'Personal data' is defined in the PDPA to mean data, whether true or not, about an individual who can be identified from that data or from that data and other information to which the organisation has or is likely to have access.

Key resources for further information

WEBSITES

• Incorporation and registration of businesses: www.bizfile.gov.sg

• Business structures in Singapore (ACRA): www.acra.gov.sg
• Inland Revenue Authority Singapore (IRAS): www.iras.gov.sg
• Monetary Authority of Singapore (MAS): www.mas.gov.sg
• Statutes of Singapore: http://sso.agc.gov.sg

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STEP branches in Singapore

There is one STEP branch in Singapore, which was established in 1997 and now has more than 600 members.

• STEP Singapore

Firms in Singapore

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Members in Singapore

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