The Not-Ordinarily-Resident (NOR) Scheme was introduced to make it attractive for individuals with global or regional business experience to live and work in Singapore.

The scheme grants favourable tax treatment to qualifying individuals for a period of five years of assessment, provided they meet the following criteria:

1. They must not have been a Singapore tax resident in the three years of assessment  before the year he/she qualifies for the NOR scheme; and
2. They must be a tax resident for the year of assessment in which they wish to qualify for the scheme.

If an individual is accorded the NOR status, he or she may enjoy the benefit of apportionment of his/her employment income and tax exemption on contributions made by the employer to an overseas pension fund for five consecutive years, subject to qualifying conditions.

Under the apportionment of Singapore employment income concession, the portion of the Singapore employment income that corresponds to the number of days the individual spent outside Singapore for business reasons, as a resident Singapore employee, is exempt from tax.

To enjoy the benefit of time apportionment of their employment income, an NOR taxpayer must:

1. spend a minimum of 90 days outside of Singapore for business reasons; and
2. must have a minimum Singapore employment income of $160,000.

The other concession under the NOR Scheme provides for tax exemption on employers’ contributions to a non-mandatory Overseas Pension Fund or Social Security Scheme.

In order to qualify for the tax exemption under this concession, the following conditions must be met:

1. The NOR taxpayer is not a Singapore Citizen or Permanent Resident; and
2. The NOR taxpayer’s employment income must be at least $160,000; and
3. The employer must not claim a deduction made to the NOR taxpayer’s overseas pension or provident funds and social security schemes up to the NOR cap.

On 19 October 2018, the Inland Revenue Authority of Singapore (IRAS) provided further clarification that condition 3 is considered met where:

1. the contribution is borne by a foreign company and is not charged or recharged to  the Singapore employer, as no deduction on the contribution is taken by the Singapore employer; or
2. the employer is a tax-exempt body or representative office that is not required to file a tax return, as no deduction on the contribution is taken by the employer.

The above was revised from the previous clarification by IRAS that condition 3 is not satisfied if the contribution is not charged or recharged to any Singapore entity.

For further information, please refer to IRAS’ website.

Source: Inland Revenue Authority of Singapore