Sole Proprietor Tax in Singapore: How Much Do I Need to Pay?

If you’re running a sole proprietorship in Singapore, the last thing you want is a tax surprise — or worse, trouble with the Inland Revenue Authority of Singapore (IRAS).

Unlike companies, where business income is taxed separately, your business profits are treated as personal income. That might sound simple, but there’s more to it than lumping everything together. If you’re not 100% clear on what counts as taxable income, what you can deduct, or when to file, it’s easy to slip up.

And when it comes to IRAS, even small mistakes through negligence can lead to penalties (the most serious being imprisonment up to 3 years)¹.

But don’t worry. This guide will walk you through how sole proprietorship tax actually works, so you can avoid tax surprises, stay compliant, and keep your business running smoothly. We'll also mention Wise Business as an alternative business account to efficiently manage your international payments and save on conversion fees.

Table of contents
How sole proprietorship tax works in Singapore How to calculate taxable income as a sole proprietor in Singapore Sole proprietorship tax rates explained How to pay less in sole proprietorship tax in Singapore (legally, of course) Sole proprietorship tax pitfalls

How sole proprietorship tax works in Singapore

Let’s start with the basics.

A sole proprietorship is the simplest structure of business ownership in Singapore.

It’s just you running the show, and there’s no legal separation between you and your business.

So, unlike companies that are taxed at corporate tax rates, sole proprietorship tax is tied to your individual income tax rates².

You report your business profits as part of your personal income tax. You’ll do this in Form B or B1 when filing your annual income tax return.

Meaning? If your business earned SGD60,000 last year, and you had no other income (e.g., from employment), you’ll be taxed based on that SGD60,000 as an individual.

That said, before you can even start worrying about filing or paying sole proprietorship tax, you must register your sole proprietorship with the Accounting and Corporate Regulatory Authority (ACRA)³.

This gives your business a legitimate footing and allows you to open a business bank account, issue invoices under your company’s name, and, of course, file sole proprietorship tax.

Not sure which is the best business account for your Singapore sole proprietorship?
➡️ Check out our review of the Best Bank Accounts For Singapore-based sole proprietorships here ⬅️

How to calculate taxable income as a sole proprietor in Singapore

So how do you determine how much of your business income is taxable?

It’s pretty straightforward. Just take your business revenue and subtract any allowable business expenses (costs you have incurred in the course of running your business), like⁴:

• Office rent or home office costs
• Supplies and materials
• Marketing and advertising
• Business travel
• Business phone and internet bills
• Repairs and maintenance of assets used for business

Note: personal and private expenses are not allowable as they do not relate to your business.

What’s left is your net business income, and that’s what IRAS wants to tax. Here’s an example:

• Revenue: SGD100,000
• Deductible business expenses: SGD30,000
• Net taxable income: SGD70,000

That SGD70,000 is what you’ll report for your sole proprietorship tax.

Sole proprietorship tax rates explained

Since your business income is taxed as personal income, you’ll fall under Singapore’s individual income tax rates. These are progressive, meaning the more you earn, the higher your tax rate.

Here’s a quick look at the resident tax rates from YA 2024 onwards⁵:

Chargeable income	Income tax rate (%)	Gross tax payable (SGD)
First $20,000 Next $10,000	0 2	0 200
First $30,000 Next $10,000	- 3.50	200 350
First $40,000 Next $40,000	- 7	550 2,800
First $80,000 Next $40,000	- 11.5	3,350 4,600
First $120,000 Next $40,000	- 15	7,950 6,000
First $160,000 Next $40,000	- 18	13,950 7,200
First $200,000 Next $40,000	- 19	21,150 7,600
First $240,000 Next $40,000	- 19.5	28,750 7,800
First $280,000 Next $40,000	- 20	36,550 8,000
First $320,000 Next $180,000	- 22	44,550 39,600
First $500,000 Next $500,000	- 23	84,150 115,000
First $1,000,000 In excess of $1,000,000	- 24	199,150

Details accurate as of 10 May 2025

So, if your net business income is SGD100,000, here’s what you’ll have to pay in sole proprietorship tax:

• SGD3,350 (first $80,000), and
• 11.5% of SGD20,000, which equals SGD2,300

Which totals to SGD5,650.

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How to pay less in sole proprietorship tax (legally, of course)

You can’t avoid taxes, but you can avoid overpaying. Here are 2 smart moves you can make to lighten your sole proprietorship tax load without bending any rules.

Claim these deductions to lower your tax bills

Want to reduce your sole proprietorship tax bill legally?

The key is knowing what you can deduct — and actually claiming it. Every legitimate business expense you record (you can refer to IRAS’ website to check out the complete list of allowable deductions) will lower your tax obligations.

Take marketing, for example.

If you spent SGD12,000 last year building your website, running ads, or hiring a designer for your brand, these costs are fully deductible. The same goes for other essentials like office supplies, software subscriptions, and even your phone bill if used for work.

Over time, these add up. And when tax season rolls around, this could mean the difference between a painful and manageable bill.

Good records, lower taxes: documentation pays off

You can only claim expenses if you can prove them⁴.

That means holding on to receipts, invoices, bank statements, and even WhatsApp messages — basically anything that shows the expense was real and business-related.

IRAS requires all claims to be backed by proper and complete source documents, and here’s the important bit: you need to keep those records for at least 5 years. Use apps or accounting software like Xero, QuickBooks, or even a well-organised Google Sheet if you’re just starting out.

Staying on top of your records isn’t just good admin. It protects you in case of an audit, helps you substantiate your deductions, and ultimately keeps your sole proprietorship tax filings clean and compliant.

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Sole proprietorship tax pitfalls

Getting your sole proprietorship tax wrong can cost you. Literally.

From missed income to forgotten reliefs, even small mistakes can lead to overpaying or penalties. So before you hit “submit”, make sure you’re not falling into any of these common traps.

Failing to declare all income

Some sole proprietors make the mistake of only reporting income from big clients or skipping income paid in cash. That’s a risky move.

IRAS can and does cross-check bank records, invoices, and even third-party data.

Under-declaring income isn’t just a small error. It can be seen as tax evasion, and the consequences are serious. If IRAS believes you had the wilful intention to evade tax, you could face¹:

• A penalty of up to 400% of the tax undercharged,
• A fine of up to SGD50,000 and/or
• Imprisonment for up to 5 years

All income earned by your business (no matter how small or infrequent) must be declared under sole proprietorship tax rules. Doing otherwise is just not worth the risk.

Overlooking tax reliefs

Singapore offers various tax reliefs and rebates that can reduce your sole proprietorship tax bill⁶. Common ones include:

• Working Mother’s Child Relief (WMCR)⁷
• Central Provident Fund (CPF) Relief for Employees⁸
• Parent Relief/Parent Relief (Disability)⁹

Check which ones apply to you. These can reduce your total chargeable income and lower how much tax you end up paying.

Late tax filing

Sole proprietors are usually required to e-file their returns by 18 April each year¹⁰. And if you miss that deadline, it’s more than just a slap on the wrist. Failing to file your Income Tax Return on time is actually an offence, and IRAS doesn’t mess around.

Here’s what can happen if you don’t file on time¹⁰:

• IRAS may issue an estimated Notice of Assessment, and you’ll have to pay that amount within 1 month, even if it’s higher than what you actually owe
• You could be offered a composition fine (basically, a penalty payment of up to SGD5,000 to settle the offence)
• If it drags on, IRAS might issue a Notice to Attend Court or a summons

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Conclusion

Here’s the TL;DR: if you’re a sole proprietor in Singapore, your business income is taxed as personal income.

There’s no special sole proprietorship tax rate (unlike companies that pay a fixed 17% corporate tax rate¹¹); you’re taxed according to progressive income tax brackets, which means the more you earn, the higher the rate you pay.

The upside?

💡With smart planning, proper expense tracking, and awareness of available deductions and reliefs, you can still keep your sole proprietorship tax bill in check. Just don’t miss filing deadlines or forget to declare your full income. IRAS takes that seriously. To further streamline your financial management, especially if you transact frequently with international vendors and customers, consider opening a Wise Business account. Wise Business gives you everything you need to grow your business and operate internationally — without the high fees, hefty admin, and headache of a local bank.

• Hold and manage 40+ currencies for all your international transactions
• Pay overseas suppliers and receive cross-border payments without getting hit with exchange rate markups
• Always get the mid-market rate
• Seamless integrations with popular accounting software
• Say goodbye to monthly fees

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Sources:

1. IRAS Errors in tax returns
2. IRAS Basic guide for self-employed persons
3. ACRA Starting sole proprietorships or partnerships
4. IRAS Business expenses and deductions
5. IRAS Individual income tax rates
6. IRAS Tax reliefs
7. IRAS Working Mother’s Child Relief
8. IRAS Central Provident Fund (CPF) Relief for employees
9. IRAS Parent Relief/Parent Relief (Disability)
10. IRAS Late filing or non-filing of Individual Income Tax Returns (Form B1/B/P/M)
11. IRAS Basic Guide to Corporate Income Tax for Companies

Sources checked on: 10th May 2025