Thursday, November 05, 2015

The super rich pays little tax

Mr. Tan,
Singapore wants to attract the super rich to live in Singapore. We reduced our income tax rate to very low level and removed all estate duty. But, we do not tax the foreign income of the super rich. How does Singapore benefit from having this strategy to attract the super rich?

You are correct that the super rich do not pay any income tax on their income that is earned from overseas and brought into Singapore. If they do not have any income from Singapore, they do not have to pay any tax. They also enjoy estate duty exemption when they pass away.

Perhaps they will benefit the Singapore economy indirectly. If they set up their headquarters here, they will employ people in Singapore. If they put their money here, they may use the wealth management services provided by our banks.

But, I suspect that many of the rich foreigners do not employ many people here, so their benefit to Singapore is questionable.

The real beneficiaries of the Singapore tax regime are the people who earn high income from Singapore, i.e the top earners in the legal and medical professional, the top ministers and civil servants and the top CEOs. They enjoy million dollar salaries and profits from their activities in Singapore and pay a low rate of tax here.

To compensate for the low tax from the top earners, the government introduced GST that is levied on everyone. But the low income people pay a higher proportion of their earnings in GST. They are badly off.

I dislike the GST and low income tax rates in Singapore.

1 comment:

Anonymous said...

You forgot the convoluted way of calculating GST rebates and reimbursement.

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