Singapore Prime Minister Lee Hsien Loong has announced during his National Day address, that all good things – such as the newly announced initiatives – have to be paid for, and probably through higher taxes.
As discussed by Singapore company registration specialist Rikvin, the government is steering the country down a different path and has unveiled strategic initiatives in four main areas – infrastructure, healthcare, housing and education.
According to Mr. Chua Hak Bin, economist at Bank of America Merrill Lynch, the government will be able to afford the initiatives for a few years and its spending will undoubtedly rise. However, to fund the long-term additional healthcare programs, higher tax rates may be on the horizon.
Singapore has essentially been an open economy and has continued to enjoy prosperity as a result. This is in part due to its attractive tax rates and vast network of trade and tax treaties.”
“In order to attract investments and entice corporations to start a Singapore company, Singapore’s tax rates must remain attractive.
The view was not disputed by PM Lee, who cited higher taxes or cutting back on other spending as necessary towards paying for the programs.
On the matter of which type of tax it would be, Mr. Irvin Seah, economist at DBS anticipates that the Singapore personal income tax ceiling i.e. 20% may be the first to rise. This view is shared by other analysts who see this as a more likely possibility rather than an increase in Singapore corporate tax rates.
Their view is that increasing corporate tax rates would not sway in Singapore’s favor, amid increased competition for investments in the region. In addition, doing so would not address the issue of inequality in Singapore as well.
Commenting further, Mr. Satish Bakhda, Head of Operations at Rikvin said, “Singapore has essentially been an open economy and has continued to enjoy prosperity as a result. This is in part due to its attractive tax rates and vast network of trade and tax treaties.”
“In order to attract investments and entice corporations to start a Singapore company, Singapore’s tax rates must remain attractive. The presence of corporations and investors in Singapore help contribute to the creation of jobs and opportunities for startups. It is therefore in Singapore’s interest to maintain attractive tax rates, and we anticipate that it will do so,” affirmed Mr. Bakhda.
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