Income tax return for taxation also vary, making comparisons all the more difficult. Countries that tax income generally use one of two systems: territorial or residential. In the territorial system, only local income – income from a source inside the country – is taxed. In the residential system, residents of the country are taxed on their worldwide (local and foreign) income, while nonresidents are taxed only on their local income. In addition, a very small number of countries, notably the United States, also tax their nonresident citizens on worldwide income. Countries with a residential system of taxation usually allow deductions or credits
Income tax in Singapore of assessment is based on income earned in the preceding calendar year. Taxation is based on the source principle, in which only income earned at source, in this case in Singapore, or those derived from overseas but received in Singapore, are taxable. Any income arising from sources outside Singapore and received in Singapore on or after 1 January 2004 by an individual (other than partners of a partnership) is exempt from tax. This system has the potential to allow for tax avoidance practiced by individuals who derive income from abroad, gain tax exemptions via their non-resident status there, and use