Being self-employed in Singapore offers flexibility and independence, but it also means you are responsible for your own tax filing and CPF contributions. Unlike employees who have tax handled through payroll, freelancers, sole proprietors and independent contractors must navigate the system themselves. This guide covers everything you need to know — from calculating your net trade income to meeting your MediSave obligations and filing your annual tax return.
Who Counts as Self-Employed?
IRAS and the CPF Board consider you self-employed if you earn income from a trade, business, profession or vocation that you carry on by yourself or in partnership. This includes freelancers, hawkers, taxi drivers, private-hire car drivers, insurance agents, real estate agents, commission-based salespersons, tutors, and anyone running a sole proprietorship. If you receive a Form IR8A from the entity paying you, you are likely an employee. If you invoice for your services and are not on anyone's payroll, you are self-employed.
The distinction matters because employees have CPF contributions deducted automatically, while self-employed persons must make their own MediSave contributions. The tax filing process is also different — self-employed persons file Form B instead of Form B1.
Calculating Net Trade Income
Your net trade income (NTI) is the figure on which both your income tax and your MediSave contributions are based. It is calculated as your gross revenue minus all allowable business expenses. The key word is "allowable" — not every expense you incur can be deducted. The expense must be wholly and exclusively incurred in the production of your income.
Common deductible expenses for self-employed persons include:
- Rent: The cost of renting business premises, or a proportionate share if you work from home (based on the area used exclusively for business).
- Utilities: Electricity, water, and internet, apportioned between business and personal use.
- Transport: Travel expenses directly related to business activities, but not daily commuting costs.
- Professional fees: Accounting, legal, and consultancy fees incurred for the business.
- Supplies and materials: Raw materials, stationery, and consumables used in the business.
- Depreciation (capital allowances): You can claim capital allowances on equipment, computers, furniture, and other fixed assets used in the business over their useful life.
- Staff costs: Wages, CPF contributions, and benefits for any employees you hire.
- Insurance: Business insurance premiums such as professional indemnity insurance.
You cannot deduct personal expenses, fines and penalties, private motor vehicle expenses (unless you are in the transport business), or any amount that constitutes a provision rather than an actual expense incurred.
Mandatory MediSave Contributions
If you are a Singapore citizen or Permanent Resident and your net trade income exceeds S$6,000 per year, you are required to contribute to your MediSave Account. This is not optional — the CPF Board enforces it, and there are penalties for non-compliance.
The MediSave contribution rate depends on your age and net trade income. For self-employed persons aged 55 and below with NTI above S$18,000, the applicable rate is currently around 10.5 per cent of NTI, subject to the MediSave contribution cap. The exact rate varies with age group — older SEPs pay a slightly lower rate. For NTI between S$6,000 and S$18,000, a graduated scale applies to ease the burden on lower-income earners.
Contributions are payable by the due date stated on the Notice of Computation issued by the CPF Board. Late contributions incur an interest charge of 18 per cent per annum (1.5 per cent per month). Persistent non-compliance can result in prosecution. The MediSave contribution is, however, deductible for income tax purposes — so it directly reduces your taxable income.
Voluntary CPF Contributions
While MediSave is mandatory, contributions to the Ordinary Account and Special Account are voluntary for self-employed persons. Making voluntary contributions is worth considering for several reasons. First, you can enjoy CPF tax relief on mandatory MediSave contributions and voluntary CPF contributions (up to the CPF annual limit). Second, your OA contributions can be used for housing, while SA contributions grow at 4 per cent per annum — significantly higher than most savings accounts.
To make voluntary contributions, you need to apply to the CPF Board. The combined mandatory and voluntary contributions cannot exceed the CPF Annual Limit, which is computed based on the lower of your NTI or the prevailing OW ceiling multiplied by 12 months. This cap ensures that SEPs receive the same CPF benefits as employees earning comparable incomes.
Filing Your Tax Return
Self-employed persons file Form B via IRAS's myTax Portal. The form requires you to declare all sources of income, including employment income if you have a part-time job, rental income, and any other assessable income. For your self-employment income, you need to provide a profit and loss statement showing your revenue and expenses.
If your annual revenue is S$500,000 or less, you can use the simplified two-line statement method — just declare your total revenue and total expenses. IRAS accepts this without requiring a detailed breakdown. If your revenue exceeds S$500,000, you must prepare a full set of accounts, including a profit and loss statement and a balance sheet.
The filing deadline for e-filing is 18 April. IRAS will issue a Notice of Assessment after reviewing your return, and any tax payable is due within one month of the notice date. You can opt for GIRO instalment payments to spread the tax bill over 12 months interest-free, which can help with cash flow management.
Estimated Assessments and Penalties
If you fail to file your tax return, IRAS will issue an estimated assessment based on the information available to them. This estimate is often higher than your actual liability because IRAS errs on the side of caution. You will then need to file an objection with supporting documentation to correct the assessment. Late filing also attracts penalties — a surcharge of up to S$1,000 and potential prosecution for persistent non-filers.
Record Keeping
You are required to keep business records for at least five years. These include invoices, receipts, bank statements, contracts, and any other documents that support the figures in your tax return. Good record keeping is not just about compliance — it makes filing much easier and ensures you do not miss any deductible expenses that could lower your tax bill.
Final Thoughts
Being self-employed in Singapore comes with administrative responsibilities that employees do not face, but the system is designed to be manageable. Calculate your net trade income accurately, make your MediSave contributions on time, keep good records, and file by the deadline. The tax rates are the same progressive rates that apply to employees, so the main difference is that you need to manage the process yourself. Use our Singapore income tax calculator to estimate your tax liability and plan your cash flow throughout the year.