What You Need to Know About the New Tax Measures in Singapore

Singapore is a key economic player in Southeast Asia. With its strategic location and highly educated workforce, it has the potential to be a leading global hub of trade and commerce.

Singapore is also considered one of the most business-friendly cities globally. The country has an extensive network of international trade agreements and bilateral agreements with many countries worldwide, allowing Singapore to be a gateway for more straightforward global trade.

As global economies gradually open up during the second quarter of 2022, Singapore aims to seize this opportunity by amending tax measures to benefit businesses.

Here’s what you need to know about the new measures:

GST

Between 2022 and 2025, the goods and services tax rate has increased from 7% to 9%. Of this increase, there will be the first phase in 2023 when the GST goes up from 7% to 8%. This change will be followed by a second phase in 2024, when the GST rate increases from 8% to 10%.

Property Tax

Instead of presenting a new wealth tax, the government proposed the following adjustments:

• The tax will increase for non-owner-occupied properties in the residential area, with the most significant increases being 12% to 36%.
• Taxes for individual homeowners will be increased from 4% to 16%, while taxes on higher-end homeowners who own residential properties will increase to 32%.
• A new tax on vehicles over S$80,000 have added to the standard registration fees. This change has aimed at luxury cars and offers a way to generate additional revenue.

The rate changes will divide over two years, with the initial change taking effect in 2023 and the second change on January 1 2024. For ARF, the change will be effective for vehicles with COE certificates obtained after February 23, 2022.

Singapore plans to maintain its premier status as a wealth management hub while also ensuring that the rich contribute more tax revenues.

However, the finance minister said that the government would continue to study other countries’ imposition of wealth taxes and explore options to tax wealth effectively.

Carbon Tax

This tax was introduced first in Singapore at S$5 per tonne of greenhouse gas emissions. The carbon tax will increase to S$25 per tonne in 2024 and then to S$45 per tonne in 2025. In 2026 and 2027, the carbon tax has expected to increase further. In addition, the government plans on increasing the cost of carbon tax further by 2030 to reach as high as S$50 — $80 per tonne.

From 2024, the government will permit businesses to use international carbon credits in place of a carbon tax to reduce the company’s emissions and offset them if necessary.

The Minimum Effective Tax Rate

The corporate income tax has always been at 17% in the past, but things are changing. In the upcoming year, Singapore will be considering a METR that would top up a multinational enterprise group’s tax rate in Singapore to 15%.

Singapore will require MNE groups to have annual revenue of at least $830 million to comply with METR.

Personal Income Tax

Individual who has chargeable income over S$320,000 (approximately $236,000) will pay a tax rate of 22%.

Moreover, the chargeable income tax rates for the top marginal PIT are going up in Singapore from 2024 onwards. It will increase to 24% and chargeable income above S$500,000 and up to S$1 million on top of existing rates.

Because of the proposed changes, the rate structure for non-resident individuals has increased from 22% to 24% effective 2024.

Singapore is one of the most developed countries in Asia and is also a popular destination for multinational companies. To maintain sustainable economic growth, Singapore needs to adjust its tax system to remain competitive in the global market.