A guide to Singapore-US tax treaty: What businesses need to know

Is there a Singapore-US tax treaty?

The answer is clear: no, there is no comprehensive income tax treaty between Singapore and the United States. This often surprises founders and business owners, especially given that both countries maintain extensive tax treaty networks globally. The US maintains over 60 comprehensive tax treaties, while Singapore has signed more than 90 double taxation agreements with other nations.

This absence matters because tax treaties typically provide crucial protections, including reduced withholding tax rates on cross-border payments, clear rules regarding where businesses pay income tax, mechanisms to avoid double taxation, and certainty about taxing rights. Without these protections, SMEs and startups operating between Singapore and the US face a higher tax burden and greater compliance complexity.

The misconception about a US-Singapore tax treaty persists partly because limited agreements do exist between the two countries, and also because both nations are sophisticated financial centres where people expect comprehensive tax coordination. However, recent surveys identify Singapore as a top priority for future US tax treaties, suggesting this gap may eventually close.

What agreements exist between Singapore and the US

Understanding what limited agreements actually exist helps clarify why many startups, SMEs, and solopreneurs still encounter unexpected tax liability when operating across borders. Whilst there's no broad Singapore-US tax treaty, two specific agreements do connect the countries' tax systems in narrow ways.

Shipping and aircraft income agreement

Since 1983, Singapore and the US have maintained a limited agreement that exempts shipping and aircraft operators from paying income tax in the other country. For a Singaporean company operating cargo flights or vessels to US ports, this means no US tax on those operations (and vice versa for US operators in Singapore). This agreement reflects practical cooperation in international transport but doesn't extend to other business activities.

FATCA Intergovernmental Agreement

The Foreign Account Tax Compliance Act (FATCA) agreement, updated to a reciprocal model in 2018, requires Singapore financial institutions to report information about accounts held by US citizens and US taxpayers to the Inland Revenue Authority of Singapore (IRAS), which then shares this data with the IRS. This information exchange helps combat tax evasion, but doesn't reduce your actual tax liability or provide relief from double taxation.

Importantly, this agreement facilitates information sharing for compliance purposes only and does not reduce withholding tax rates or provide relief from double taxation.

What these agreements don't cover

Critically, neither agreement addresses the core concerns of most businesses operating cross-border: business profits, dividends paid to shareholders, interest payments, royalties and licensing fees, employment income, or capital gains. These represent the vast majority of income flows between Singapore and US entities, all of which remain subject to potential double taxation without treaty protection.

Tax treatment of common cross-border income

Understanding how different types of income get taxed is essential for startups, small businesses, and solopreneurs planning cross-border operations. Without a Singapore tax treaty with the US to provide clarity, you're navigating based on each country's domestic tax rules.

Dividends from US companies

When a Singapore tax resident receives dividends from a US company, the US typically withholds 30% tax at source under its domestic law. This rate would normally be reduced to 5-15% under most tax treaties, but without a treaty, the full 30% applies. Singapore doesn't tax foreign income remitted by individuals in most cases, which provides some relief. However, for corporate entities, this 30% withholding tax represents a high cost that treaty countries often avoid.

Interest and royalties

Interest payments from US sources to Singapore recipients face taxation at 30% withholding tax, though certain types of portfolio interest may be exempt. Royalty payments for intellectual property also face 30% US withholding. Compare this to countries with US tax treaty benefits, where rates often drop to 10-15% or even zero in some cases. For startups licensing technology or receiving financing, these higher rates directly impact cash flow.

These exemptions are narrowly defined and subject to strict conditions, meaning many commercial loans, related-party financing arrangements, and structured funding used by startups may still attract the full 30% withholding tax.

Business income and services

Business income creates the most complexity. A Singapore company providing services in the US faces US taxation if it creates a permanent establishment there. Without treaty thresholds that would protect short-term activities, even modest US operations might trigger US tax obligations. The same applies in reverse: US companies operating in Singapore must navigate Singapore tax rules without treaty guidance about what level of activity creates tax exposure.

In addition to federal taxes, US state taxes may also apply depending on where the services are performed or where economic activity is deemed to occur, further increasing compliance complexity for foreign businesses.

Employment income

Employment income earned whilst physically present in a country is generally taxable there. US expats working in Singapore face taxation in both countries: Singapore taxes them as residents if they stay 183 days or more, whilst the US taxes them on worldwide income regardless of residence. This dual obligation stems from Singapore's territorial plus residence system meeting the US's citizenship-based system, with no treaty to coordinate the two approaches.

Permanent establishment risks without a treaty

The concept of permanent establishments becomes particularly important when operating without treaty protection. Understanding when your business activities cross the line from casual dealings into creating tax obligations can save you from unexpected tax liability.

How the US permanent establishment rules apply

Under US domestic law, a foreign company creates a permanent establishment (PE) if it maintains a fixed place of business in the US through which it conducts business. This could be an office, warehouse, or even a construction site lasting more than 12 months.

Once you have a PE, the US can tax the business profits attributable to that establishment. The challenge is that US rules offer less clear guidance than typical treaty provisions about what activities cross the line.

Sales, services, and digital presence

Modern business models create particular uncertainty. Does your Singapore startup's sales representative visiting US clients create a PE? What about remote employees working from the US? Does server infrastructure constitute a fixed place of business? Tax treaties typically include specific provisions addressing these scenarios, but without a Singapore-US tax treaty, you're interpreting broader domestic law with less certainty.

For digital businesses common amongst startups and small businesses, this uncertainty is particularly acute. The US has been aggressive about asserting taxing rights over digital activities, whilst Singapore maintains a territorial approach focused on where value is created. These different philosophies can clash without treaty coordination.

Why treaty absence increases risk

Treaties typically provide safe harbours: preparatory or auxiliary activities that won't create a PE, time thresholds for when presence becomes significant, and clear definitions of what constitutes a dependent agent who might create PE exposure. Without these protections, SMEs face higher compliance costs as they try to stay within safe boundaries and a greater risk of unexpected tax liability when expansion activities inadvertently cross threshold lines.

Relief options without a treaty

The absence of a tax treaty doesn't mean you're entirely without tools to manage double taxation. Both Singapore and the US offer domestic mechanisms that provide some relief, though with limitations that make proper planning essential for startups, SMEs, and individual taxpayers.

Foreign Tax Credit (Singapore perspective)

Singapore offers a unilateral tax credit for foreign taxes paid on foreign-sourced income when that income is taxed in Singapore. This tax credit helps offset double taxation, though it's limited to the lower of the foreign tax paid or the Singapore tax that would apply to that income.

Since Singapore's corporate tax rates are competitive globally, this often provides meaningful relief for businesses. However, individuals generally won't need this relief because foreign income remitted to Singapore by individuals isn't taxed in most cases.

FEIE and FTC (US taxpayer perspective)

US citizens and permanent residents have two main tools through which they can reduce their US taxes. The Foreign Earned Income Exclusion (FEIE) allows you to exclude up to USD $126,500 of foreign earned income from US taxes in 2024. This exclusion applies to employment or self-employed income, not to passive income like dividends or interest. To qualify, you must meet either a physical presence test (330 days outside the US in a 12-month period) or a bona fide residence test.

Alternatively, the Foreign Tax Credit (FTC) allows you to claim a dollar-for-dollar credit for foreign taxes paid against your US tax liability. Since Singapore's personal income tax rates reach 24% whilst US rates can exceed 37%, the FTC often doesn't eliminate all US tax for higher earners. However, you can generally carry forward unused credits, providing some value over time.

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Limitations and compliance challenges

These relief mechanisms help ,but don't eliminate all challenges that tax treaties would address. You still face: higher withholding tax rates on cross-border payments, complex calculations to determine optimal relief strategy (FEIE vs FTC), significant filing requirements and compliance costs, timing mismatches between when you pay foreign tax and when you claim relief, and uncertainty about the treatment of specific income types without treaty guidance.

For solopreneurs and small businesses, these compliance requirements can be particularly burdensome relative to the size of cross-border transactions.

Social security and payroll considerations

Beyond income tax, the absence of a totalization agreement between Singapore and the US creates an additional tax burden for startups and SMEs with employees working across borders. This often-overlooked aspect can significantly impact overall labour costs and employee compensation planning.

No totalization agreement

The US and Singapore have no totalization agreement, which means that social security contributions may be required in both countries simultaneously. Totalization agreements typically ensure workers only contribute to one country's social security system, preventing dual contributions. Without such an agreement, coverage rules default to each country's domestic law.

Dual contribution risks

If you're a self-employed individual or working for a US company whilst resident in Singapore, you'll likely need to contribute to both Singapore's Central Provident Fund (CPF) and US Social Security.

For 2025, this means up to 15.3% to US Social Security and Medicare on income earned up to USD $168,600, plus Singapore CPF contributions of up to 37% (combining employer and employee shares) on income up to SGD $102,000. These dual contributions create a substantial tax burden that treaty-protected workers in other countries avoid.

Whilst there's no totalization agreement between Singapore and the United States, this doesn't automatically mean that every individual or business will face dual social security contributions. In practice, whether contributions apply in one country or both depends on factors such as citizenship, residency status, employment structure, and where the work is physically performed.

Structuring employment correctly

Proper structuring becomes crucial to manage these costs. Employing workers through a Singapore entity may avoid US Social Security obligations if the employee isn't a US citizen or permanent resident.

Similarly, careful attention to where services are performed and which entity pays compensation can influence contribution requirements. For startups expanding internationally, these considerations should factor into decisions about entity structure and employment arrangements.

Estate and wealth planning risks

An often-overlooked consequence of the missing Singapore-US tax treaty affects startup founders and investors with wealth spanning both countries. Estate tax exposure can significantly erode the value transferred to heirs if not properly addressed.

US estate tax exposure

The US imposes an estate tax on the worldwide assets of US citizens and domiciliaries. For non-US persons, the estate tax applies to US-situated assets, with rates reaching 40% and only a USD $60,000 exemption (compared to USD $13.61 million for US citizens in 2024). Most tax treaties provide relief from this harsh treatment, but Singapore doesn't have estate tax treaty coverage with the US.

US-situated assets

US-situated assets include US real estate, shares in US corporations, certain US debt obligations, and interests in US partnerships.

For a Singapore-based startup founder holding shares in a US subsidiary or a Delaware holding company, these shares could trigger US estate tax exposure. Given that many startups incorporate in Delaware for commercial reasons, this creates hidden estate tax risks that many founders don't discover until planning their estate.

Why this matters for founders and investors

The combination of high rates, low exemptions, and broad asset coverage means significant wealth can be lost to estate taxes without proper planning. Solutions exist, such as holding US assets through non-US corporations or using life insurance to cover potential tax liability, but these add complexity and cost. Treaty relief would simply eliminate or significantly reduce this exposure, but without a Singapore US tax treaty, proactive planning becomes essential.

Common mistakes businesses make

Operating between Singapore and the US without treaty protection requires careful attention. Based on common patterns, here are mistakes that frequently catch solopreneurs, startups, and SMEs off guard.

Assuming treaty protection

The most fundamental error is simply assuming a tax treaty exists because both countries are sophisticated financial centres with extensive treaty networks. This assumption leads businesses to structure transactions expecting reduced withholding tax rates or treaty protections that simply aren't available. Always verify treaty status before closing cross-border deals or establishing operations.

Mispricing withholding tax impact

When pricing services or structuring investments, failing to account for the full 30% withholding tax on dividends, interest, or royalties can destroy economics. A contract that looks profitable at 10% withholding (typical treaty rate) becomes marginal or unprofitable at 30%. Build actual withholding tax rates into financial projections from day one.

Poor documentation

Without clear treaty provisions to fall back on, proper documentation of where services are performed, what creates taxing rights, and how to substantiate relief claims becomes crucial. Yet many small businesses maintain inadequate records, particularly for self-employed individuals and solopreneurs who may not have dedicated finance teams. Strong documentation habits protect you if tax authorities challenge your positions.

Weak cashflow planning

Higher withholding tax rates and potential double taxation create cash flow challenges that proper planning must address. If you're paying 30% withholding on a transaction but can only claim relief when filing your tax return months later, you need working capital to bridge that gap. Factor these timing differences into cash flow projections, particularly for startups where cash management is critical.

Can fintech solutions help manage Singapore-US tax complexity?

The challenges of operating between Singapore and the US without treaty protection extend beyond pure tax calculations. The tax burden, compliance requirements, and cash flow all connect to how you manage money flows between the two countries. This is where modern fintech platforms, like Aspire, become strategic tools, not transactional services.

Managing multi-currency operations efficiently matters when you're dealing with higher withholding tax rates and potential double taxation. Being able to hold funds in both SGD and USD, make global payments at competitive FX rates, and time transactions strategically can preserve capital that would otherwise be lost to unfavourable exchange rates or unnecessary conversion costs. For startups and SMEs where every dollar counts, these savings accumulate meaningfully over time.

Visibility into spending across currencies and jurisdictions also supports better tax planning. When you can track exactly what income originates from which country, what expenses relate to US versus Singapore operations, and how cashflows time out across your business, you're better positioned to optimise your tax position within available relief mechanisms. This visibility becomes particularly valuable for calculating foreign tax credit claims or demonstrating that income qualifies for exemptions.

Platforms like Aspire are built specifically for businesses operating across borders, with features designed around the realities that solopreneurs, startups, and growing SMEs face. Rather than cobbling together separate banking relationships, payment providers, and expense systems in each country, with Aspire, you get an integrated infrastructure that moves at the speed your business demands. This integration doesn't eliminate tax liability, but it gives you the financial visibility and control needed to manage that liability effectively.

Frequently asked questions

Does Singapore have a tax treaty with the US?

No, there's no comprehensive income tax treaty between Singapore and the United States. Only limited agreements exist covering shipping and aircraft income, plus a FATCA information exchange agreement. Core business income, dividends, interest, royalties, and employment income have no treaty coverage, meaning standard domestic tax rules apply in each country with potential for double taxation.

Do Americans pay income tax in Singapore?

Yes, Americans working in Singapore typically pay income tax to both countries. Singapore taxes you as a resident if you're physically present 183 days or more in a calendar year, with rates from 0% to 24% on a progressive scale. The US taxes citizens on worldwide income regardless of where they live.

However, Americans can reduce their US tax liability through the Foreign Earned Income Exclusion (excluding up to USD $126,500 in 2024) or the Foreign Tax Credit (crediting Singapore taxes paid against US taxes).

Do I need to pay tax for US stocks in Singapore?

For Singapore tax residents, capital gains from selling US stocks are generally not taxable in Singapore, as Singapore doesn't impose capital gains tax. However, dividends from US stocks face 30% US withholding tax at source. These dividends are generally not taxed again when remitted to Singapore by individuals. For US expats living in Singapore, the situation differs: the US taxes citizens on worldwide income, including both capital gains and dividends, though the Foreign Tax Credit may provide some relief for the 30% withholding already paid.

What are the benefits of tax treaty in Singapore?

Whilst Singapore has no tax treaty with the US, Singapore's DTAs with other countries typically provide: reduced withholding tax rates on cross-border payments (often 10-15% instead of 30%), clear rules about which country can tax different types of income, protection against creating accidental permanent establishments, foreign tax credit mechanisms to avoid double taxation, and certainty for cross-border business planning. These benefits make Singapore's DTAs valuable for startups, SMEs, and solopreneurs operating internationally, though unfortunately, these advantages don't extend to US operations due to the absence of a comprehensive treaty.