High resolution perspective graphic of a clock with words tax season.

The core aim of the tax policy within the Singapore tax system is to raise revenue. 89.8% of this revenue is taken from the taxes imposed on Singapore citizens. This revenue is then distributed to important government operations in order to facilitate economic growth whilst still preventing inflation, maintaining a balanced budget and most importantly to deliver essential public services and goods. A lot of the revenue raised is put into the education system as highly educated citizens is considered of high importance by the Singapore government. A section of the tax revenue also goes towards national healthcare, and environmental protection as well as housing programmes.

High resolution perspective graphic of a clock with words tax season.

Further Tax Policy Objectives

Although the primary aim of the Singapore tax policy is to provide funding for government operations, there are still other objectives that are considered important.

Economic and Social Goals

A highly important objective is the desire to increase economic growth by imparting a sense of economic and social goals within the citizens of Singapore. The government has used the tax system in order to reach this goal.

  • The Singapore government has gifted certain business with an accelerated capital allowance. This means that they receive funding for any assets that are used regularly by the business.
  • Parents have been provided with a tax rebate after the birth of every child up to the fifth child. The aim of this is to encourage families to have more children which will in turn increase social mobility and economic growth, as well as increasing the amount of highly educated adults.

Competitive Rates

By keeping corporate rates competitive, the government aims to encourage more foreign investment to give the economy an important financial boost. As well as, the government counteracts this by consistently keeping individual rates low in order to encourage tax payers to work harder.

 

Tax Breakdown

Income

  • Income Tax – This is a tax that is imposed on every individual that works within Singapore. Income tax is also charged to businesses. The amount of tax charged will be dependent on the level of income.

Property

  • Property Tax – The government estimates the rental value of all properties that are privately owned. The final estimate of this represents the property tax that is charged to owners.
  • Estate Duty – The estate duty tax comes into play when the value of a deceased’s assets exceeds a pre-determined set amount.
  • Stamp Duty – When legal documents relating to stocks, shares and immovable property are concerned the stamp duty is imposed.

Automobiles

  • Motor Vehicle Tax – Motor vehicle tax is imposed of automobile owners for two reasons. The first reason is to restrict the level of car ownership throughout the country and the second reason is to tackle the problem of extreme road congestion.

Goods

  • Goods and Services Tax–Whenever money is given in exchange for goods including imports then the goods and services tax will need to be paid. This also includes products that have already been subjected to customs and excise duties. Therefore this can be considered a tax on consumption.