Lee Hsien Loong Clarifies Singapore's NOR Tax Rules

by Mary Swire, Tax-News.com, Hong Kong

13 May 2002

Speaking on Friday, Singapore's Finance Minister, Lee Hsien Loong confirmed the details of the 'Not Ordinarily Resident' (NOR) tax break scheme for expatriates living and working in the region.

Designed to address the competitive advantage enjoyed by regional rivals such as Hong Kong, the new classification announced in the recent budget will allow certain expatriate workers to pay income tax only on employment income attributable to the number of days spent in Singapore per calendar year, and to remit pre- (Singapore-based) assignment income free from tax, for a period of five years of assessment.

Employers' contributions to overseas pension funds on behalf of non-resident NOR taxpayers will also be exempt from tax in the hands of the employee.

Last week, in order to clarify confusion created by media reports, Mr Lee explained that expatriates aleady resident in Singapore can still qualify for the NOR tax perks, provided they meet the transition rules which have been put in place - namely that they must not have been tax resident in Singapore in the three years of assessment prior to the year in which they first qualify for the NOR scheme, but that they must be tax resident in the country for the year of assessment in which they want to qualify for the tax benefits.

Additionally, the Finance Minister explained, NOR taxpayers must spend more than 90 days away from the country on business, and must pay at least a minimum tax rate of 10% on total employment income.

The scheme will come into effect in the year of assessment 2003, and further deatils will be announced by the Inland Revenue Authority in August, according to reports.

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