subject: Singapore Taxes Support Economic Growth [print this page] Singapore taxes support economic growth and that is by design. Whereas some countries use taxes merely as a way to collect revenue for government operations, Singapore has chosen to use taxes as a business incentive tool. The country has been so successful at managing its use of tax funds and attracting new business that taxes did not have to be raised during the recent economic crisis. Singapore boasts a large foreign reserves fund and its economic boom is testament to its successful management of money.Many countries around the world now face enormous budget deficits leading to draconian cuts in government spending. Only recently emerging from the recession places like the European Union and the United States are dealing with a new kind of economic turmoil. Everyone has seen the riots in the streets of Greece and France. One country you did not see is Singapore, and one reason is that Singapore taxes are low and were kept low. The tax structure promoted business growth and that means Singapore did exceptionally well during the crisis and does not need to rely on austerity measures to bring its budget back in balance.The "KPMG International's 2010 Individual Income Tax and Social Security Rate Survey" reports that Singapore taxes are some of the lowest in the Asia-Pacific region. KPMG is a network of businesses that do audits, taxes and business advising. Both the business and individual tax rates are low and that is exactly what Singapore hopes to maintain. When people and businesses can retain more of their money, it's good for the economy.
The tax rate for companies making less than S$300,000 is under 9%. Companies that make more than that are paying no more than 17% in taxes. Individuals making under S$320,000 are taxed anywhere from 0% to 20%. Only those earning over S$320,000 pay the top tax rate of 20%. Low tax rates are known to stimulate economic growth because they encourage more business investment and more consumer spending. In other parts of the world, the story is very different. The UK has recently increased the VAT tax on businesses. The average global personal tax increase was .3% last year but for the European Union it was .4%.Singapore taxes also include special tax rates to promote new business startups. For example, there is a special rate of 0% on net profits up to S$100,000 for each of the first 3 years after setup. There are also special tax rates for some economic sectors that are meant to be investment incentives. It is not surprise that Singapore has experienced economic growth even as other countries lost economic ground.The low Singapore tax rates are used to recruit new businesses to the area and to attract skilled quality workers. In fact, businesses use the tax rates to attract business leaders, executives, experienced managers and other staff. Individuals do not have to pay any taxes on estates, capital gains or dividends which makes Singapore attractive as a place to work. If you are looking for a low tax area offering excellent business growth opportunities, then Singapore is the right place.
