How to Calculate Singapore NOR Tax Scheme Savings: Step-by-Step Guide

Master the Singapore NOR Tax Scheme Calculation

Hello! If you are a global professional working in Singapore, you might have heard of the Not Ordinarily Resident (NOR) tax scheme. Although the scheme has been phased out (with the last year of assessment being YA 2024 for those granted the status up to YA 2020), understanding how to calculate these tax savings is incredibly useful for retrospective tax filing, audits, and grasping the mechanics of time-apportioned tax systems.

Under this scheme, qualifying individuals enjoy a tax concession where they only pay tax on the portion of their employment income corresponding to the number of days they spent in Singapore for work.

In this guide, we will break down the formulas, run through a real-world mathematical example, and show you how to calculate your tax savings by hand!

Prerequisites: Do You Qualify?

Before diving into the math, ensure you meet these criteria for the Year of Assessment (YA) you are calculating:

1. NOR Status: You must have been granted NOR status by the Inland Revenue Authority of Singapore (IRAS).
2. Time Spent Abroad: You must have spent at least 90 days outside Singapore for business purposes in the target calendar year.
3. Minimum Income: Your Singapore employment income must be at least S$250,000.

The Core Formulas

To find your tax savings, we use three primary formulas:

1. Apportioned Employment Income: �KBLK0�

2. The 10% Floor Limit Rule: The IRAS rules state that the tax payable on your apportioned income cannot be less than 10% of your total employment income. If your calculated tax is lower than this floor, you must pay the 10% floor amount instead. �KBLK1�

3. Tax Savings: �KBLK2�

Step-by-Step Worked Example

Let's calculate the savings for Sarah, a regional marketing director.

• Sarah's Total Employment Income: S$300,000
• Days spent in Singapore: 200 days
• Days spent traveling abroad for business: 165 days

Step 1: Calculate Sarah's Apportioned Income

Using the formula: �KBLK3�

Step 2: Calculate Tax on Apportioned Income

Now, we apply the standard Singapore progressive tax rates (using YA 2024 rates) to her apportioned income of S$164,383.56:

• Tax on first S�KINL6�13,950
• Tax on the remaining S�KINL7�789.04
• Total Tax on Apportioned Income: S�KINL8�789.04 = S$14,739.04

Step 3: Check the 10% Floor Limit

We must ensure Sarah's tax isn't lower than 10% of her total income: �KBLK4�

Since her calculated tax (S�KINL9�30,000), her tax payable under the NOR scheme defaults to the floor limit of S$30,000.

Step 4: Calculate Normal Tax Liability (Without NOR)

What would Sarah pay without the NOR scheme? Let's calculate tax on her full S$300,000 income:

• Tax on first S�KINL10�38,550
• Tax on the remaining S�KINL11�2,000
• Normal Tax Liability: S�KINL12�2,000 = S$40,550

Step 5: Calculate Final Tax Savings

�KBLK5�

Sarah saves a fantastic S$10,550 on her taxes thanks to the NOR scheme!

Common Pitfalls to Avoid

• Counting Personal Travel: Only count days spent outside Singapore for business purposes. Personal vacations taken abroad must be counted as days spent in Singapore for tax apportionment purposes.
• Ignoring the Floor Limit: Many people forget to apply the 10% floor rule, leading to an underestimation of their actual tax bill.
• Leap Years: Remember to divide by 366 instead of 365 if you are calculating for a leap year!

When to Use a Calculator

While calculating this by hand is highly educational, using an online Singapore NOR Tax Scheme Calculator is much quicker and prevents manual errors when applying complex, multi-tiered progressive tax rates. Use a calculator to double-check your manual calculations before submitting any forms to IRAS!