Singapore Tax Rates and GST
||The taxes in Singapore compiled by us is for quick reference by investors, companies, small businesses, or for those employees working here. The scope includes Singapore business taxes and personal income tax and it also incorporates the recent Singapore Budget Statement 2005.
Singapore has shifted quickly from direct to indirect taxes over the years. The GST (Goods and Services Taxes), which had implemented some year back at the rate of 3% has increased to 5% with effect from 1st January 2004, and to 7% with effect from 1st July 2007.
Conversely, the corporate tax has been reduced from 30% to 20% in YA 1993 and YA 2005 respectively. The recent budget 2005 will lower the personal income tax rate over two years, from the current 22% to 21% in YA2006 and 20% in YA2007. We expect the shift from direct to indirect taxes will continue in the future years.
Singapore has one of the lowest effective tax rates in Asia-Pacific. For example, Singapore’s effective personal income tax rates are even lower than in Hong Kong, which has a maximum personal income tax rate of 16 per cent.
With a tiered rate instead of a flat rate as in Hongkong, the personal income tax rate in Singapore starts from 3.5% for someone who earns S$30,000 a year to 20% for people who earn S$320,000. A tax consultant noted that the effective tax rate for the person who earns S$30,000 is only 1.2% while the top earner of S$320,000 attracts an effective tax rate of 13.3%. But a Hongkonger would pay a flat 15% for the entire $320,000.
Taxes have been reduced in the past few years as the government switches to a more broad-based consumption tax as part of its move to make the economy more competitive. Although GST has gone up to 7% from 5%, Singapore still has one of the lowest GST rates - below the global average VAT/GST rate of 16.4%, and the Asia-Pacific average of 10.5%. But the government also came up with a big package of rebates to help the lower-income groups cope with the tax changes.
Personal income tax is capped at 20%, but some two-thirds of Singaporeans do not pay personal income tax in Singapore, thanks to a host of generous reliefs and the tier system.
Meanwhile, the corporate tax rate has been cut to 18%, which is just a shade above Hongkong’s 17.5% but Singapore has a significantly lower cost of living. In 2007, Singapore ranked 2nd on the Heritage Foundation and Wall Street Journal’s Index of Economic Freedom. It was also given a score of 93/100 for its low personal income tax rates.
Furthermore, you don’t have to pay capital gains tax on profit from property equity transactions in Singapore, unlike in the United States and Canada.
Income Tax For Sole-Proprietors
Sole-proprietors are considered "self-employed" ¨C i.e. you do not pay yourself any wages. The business income is treated as part of your total personal income and taxed at personal income tax rates.
Income Tax For Partnerships
Partners in a partnership are considered "self-employed" ¨C i.e. you do not pay yourself any wages. The business income is treated as part of your total personal income and taxed at personal income tax rates.
This guide is not meant to be a comprehensive guide on income tax. It only covers the tax obligations of partners.
Income Tax For Companies
Companies are subject to "corporate taxes". The current corporate tax rate for all companies is a flat rate of 18%.
This guide is not meant to be a comprehensive guide on income tax. It only covers the tax obligations for companies.
Goods & Services Tax (GST)
GST is a tax on goods and services purchased or consumed locally. Here is a quick overview of GST and how it affects your business. It is not meant to be an in-depth guide on GST.
Withholding tax is a tax on payments made to non-residents including employees, business partners and overseas agents. Here is a quick overview of withholding tax and how it affects your business. It is not meant to be an in-depth guide on withholding tax.
Property tax is levied on all owners of property in Singapore. Here is a quick overview of property tax and how it affects your business. It is not meant to be an in-depth guide on property tax.