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Singapore’s personal income tax rates are very different from those of its regional neighbors, as well as those of countries of similar wealth. These tax rates have served the Singaporean economy well, helping to drive its tremendous economic growth and leading it to much financial success.

Singapore’s Personal Income Tax Rates

Every country’s tax authorities will impose personal income tax rates on the country’s citizens at rates deemed to be suitable. Of course, certain countries will have higher tax rates than others. When looking at the statistics from a global standpoint, Singapore has been shown to have among the world’s lowest personal income tax rates.

In Singapore, personal income tax rates for residents range from 0% to 22%. These rates are progressive, meaning that the more chargeable income a taxpayer earns, the higher the tax rate at which the taxpayer is required to pay. Those who earn less than S$20,000 in chargeable income per year do not have to pay any personal income tax. Conversely, the maximum personal income tax rate of 22% must be paid by those who earn at least S$320,000 in chargeable income every year.

 

Singapore Tax Rates vs Global Tax Rates

When Singapore’s personal income tax rates are compared to those of other notable countries in the Asia-Pacific region, it can clearly be seen that Singapore imposes low personal income tax rates. Personal income tax rates in China range from 0% to 45%; in South Korea, 7.8% to 53.4%; in New Zealand, 0% to 40%; in India, 0% to 30%; and in Japan, 15.105% to 55.945%. Notably, Singapore’s maximum personal income tax rate of 22% is far below the maximum rates of the vast majority of its regional neighbors.

Relative to other countries of similar wealth, Singapore also has much lower personal income tax rates. According to the International Monetary Fund, the three countries with the closest nominal GDP per capita to Singapore are the United States, Denmark, and Australia. In the United States, personal income tax rates range from 10% to 37%; in Australia, 0% to 45%; and in Denmark, 36% to 52.02%. Singapore’s personal income tax rates ranging from 0% to 22% once again place it well below its economic peers in this respect.

Singapore’s low tax rates have allowed its economy to benefit in various ways. One of these ways is the fact that the low rates attract high-earning, high-ranking professionals from around the world. The contributions made and business activity conducted by such people will spur the growth of the Singaporean economy. It can easily be said that one of the major factors that made Singapore a world business hub is its low personal income tax.

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Singapore’s already low personal income tax rates are further bolstered by the lack of taxation placed on capital gains, overseas income, assets received as gifts or incentives, or dividend income. Furthermore, Singapore also offers many tax incentives and exemptions. On top of these, Singapore is part of many Double Taxation Avoidance treaties. Such treaties allow individuals who have received income from abroad but are subject to Singapore taxation to be taxed just once. This fact has been a major selling point in drawing foreign investors to the country, and this again boosts the country’s economy.

The Singaporean government has been able to pair low personal income tax rates with various methods to reduce many taxpayers’ effective tax rates, then leverage this combination to tremendous effect, helping to turn Singapore into the global financial and corporate powerhouse that it is today.

How do Singapore’s Personal Income Tax Rates Measure Globally FAQs

Claiming Double Tax Relief – What is double tax relief (DTR)?2020-07-02T16:51:58+08:00

Foreign income earned by a Singapore company may be subjected to taxation twice. Once in the foreign country, and a second time when the foreign income is remitted into Singapore. A double tax relief (DTR) is the credit relief provided for under an Avoidance of Double Taxation Agreement (DTA) to reduce this double taxation. A DTR is granted by allowing the Singapore tax resident company to claim a credit for the amount of tax paid in the foreign country against the Singapore tax that is payable on the same income. A company is a tax resident of Singapore if the control and management of its business is exercised in Singapore.

What is the meaning of Companies with non-December financial year end?2020-07-02T16:51:18+08:00

Your company’s accounts are prepared up to the financial month for each year. Assuming your financial year end is 30th June, your accounts are prepared up to 30th June each year. The basis period for each YA is the preceding accounting year ended 30th June. Example, your company’s basis period for YA 2008 is from 1st Jul 2006 to 30th Jun 2007.

How income is assessed?2020-07-02T16:50:54+08:00

Income is assessed on a preceding year basis. This means that the basis period for any Year of Assessment (YA) generally refers to the financial year ending in the year preceding the YA.

2021-02-04T14:29:35+08:00March 4, 2019|0 Comments
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