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Many investors rely on Singapore for developing their business operations and other primary purposes. Setting up and operating a business in Singapore is the most significant motivator of all. Another well-celebrated determinant is the tax regime in Singapore. The city-state is known primarily for its lucrative, tax relief measures, extensive double tax treaties personal, corporate tax rates, one-tier tax system, and absence of capital gains tax.
Persons like trustees, partnership, bodies of persons carrying out business, trade or profession or corporations in Singapore are tax chargeable in all of their profits—including sales profits from capital assets—(that may arise which are Singapore- derived or other foreign) and sources income that may be resulting from the same trade, business, or profession.
What has been happening in Singapore’s consumer tax?
Taxes have been the business talk in town since the 2018 budget was released. The government revenue has become more reliant on taxes from consumers compared to taxes flooding incorporates. Why consumer?
The tax increase has been found to be the most sustainable and logical solution to Singapore’s rising spending needs. An increase in property tax, COE, personal income tax and GST all amounts to 72% tax revenue accounted from 2012 to 2017.
However, if we get into further details, we may seem to suggest that not all the hike was caused by tax increment. In fact, part of the increase was partially raised due to the hiked taxes on the wealthy. Consumption activities also played a significant role in the rise.
Property and income tax
Over the last few decades in Singapore, the personal income tax has been on the decreasing side. For instance, an individual making S$50,000 would pay 3.8% per year in 2003, but in 2017, the same individual could pay 2.5% tax rate. Of course, there has been a lot of debate on the same, which, by the look of things has always wind up on the right side. In fact, the government seem to only increase the tax on one side—the wealthy since 2012 by creating larger segments. For instance, a person in 2003 earning more than S$300,000 annually, would pay an income tax rate of 14.40% in 2012 12.92% and 2017 13.48%.
| Chargeable income | Tax rate in (%) | Gross tax in (S$) |
| First $20,000 Next $10,000 | 0 2 | 0 200 |
| First $30,000 Next 10,000 | – 3.5 | 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 In excess of $320,000 | – 22 | 44,550 |
Singapore resident tax rates from the year 2017.
Tax on housing properties also presents a similar graph of lightening the financial burden of the middle-class residents and imposing it on the wealthy. For instance, property owners or landlords had to pay an annual tax of 10 per cent before 2013. In 2014 however, segmenting began based on the value of the property. Non-owner-occupied properties (rental apartments) paid higher than owned properties or owner-occupied properties (a family home owned by the individuals living in it).
Tax on vehicles
When it comes to cars, Singapore taxation takes another turn. The country is known to be notorious on imposing incredibly high taxes for car owners on both usage and purchase. We all agree that cars are luxury assets and not basic needs (things that we can do without). Therefore, if you can afford and maintain one in Singapore, you are not needy. To begin with, the average car purchase price is S$100,000.
Here, the government of Singapore does not find the need to impose higher tax rates on wealthy individuals who own pricey cars. The simple rule is that if you own a car, you must be able to meet both the taxation and maintenance cost.
For instance, taxation from the COE sales for car quota premiums increased by over 154 per cent from between the years 2012 and 2017, as the COE prices dropped. This is to mean that the significant number of car sales only drove the massive growth in the quota premium in the previous years.
That is not all; the government has gone ahead to increase further the excise duty on fuel which was revised in 2014 from S$4.4 per ten liters and increased to S$6,4 per 10 liters in 2015.
GST
Although the Singapore GST taxes has not been revised since 2007, its revenue has abnormally gone up by 24% since the year 2012. This kind of a trend says a lot about the economy of the country. It tells how much the growth on consumption has improved. From the charts, it is clear that the increase in these revenues was due to the rise in the growth of consumption in the country for the past five years. What is more surprising is the gap between the growth rate of the median household income and the growth rate of consumption itself, which has grown by a whopping 16% between 2012 to 2017.
One of the most appealing explanations is that most consumers today continue to rely on credit cards to finance their expenses. The incriminating evidence can be seen on the 24% increment on personal loans.
Can consumers save?
Absolutely, there is always a prospect to save even with the little income. How? As we have observed from the above analysis, the government of Singapore pays much attention to the consumption and growth rate of every sector in the country. We can also affirm that most increment has been inflicted on wealthy individuals.
For example, if a particular business is not growing, there are very few possibilities that the government will increase its tax. The same principle applies to everyone; that the government only increases the tax rate on business or institutions that they have no doubt have the capability of growing with it. Therefore, that means that anyone can save.
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