Tax talks: Singapore’s 20% tax rate remains among the lowest

The rates have been static for the last 5 years - but for how much longer will this be the case?

According to the latest KPMG International Individual Income Tax and Social Security Rate Survey 2011, less than 15 percent of 96 countries surveyed from around the world adjusted their top personal income tax rate over the last year. None of those that did were G-20 member states. This is In comparison, the previous year saw more than twice as many rate changes and four G-20 members reported updates.

Within South-East and East-Asia, Singapore’s tax rate remains among the lowest, along with Hong Kong and Macau in 2011. The highest rate of individual tax in Singapore has also stayed
static at 20 percent for the last five years.

The income tax bracket at which this highest rate takes effect (US$262,838, up US$31,122 from 2010) stays as the third highest among countries survey. This suggests that among Singapore residents paying income tax, most pay an effective rate of tax of less than 20 percent.

Mr BJ Ooi, Partner and Head of International Executive Services of KPMG in Singapore comments, “Besides Singapore, the largest thresholds rest with the larger economies. These are the United States, Germany (although a 42 percent rate kicks in at relatively lower income level), Japan and the UK which all wait until after an individual has more than USD200,000 of taxable income before imposing the top rate.”

Very little activity outside of Europe

For the Asia region, the average rate remains at just over 23 percent. The economic powers of China, India and to a lesser extent, South Korea, showed no change in rates.

The personal tax rate competition between Hong Kong and Singapore remains but to date there has been no change in the fundamental state of play.

Within the Asia region and its diverse sub-regions, the only rate change is seen in Jordan which
implemented an 11 percent decrease in rates.