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Asia Pacific – Tax Rise For Higher Income Singaporeans Contrasts With Hong Kong Approach.

2 March, 2015

 

 
Singapore is to raise taxes on its wealthiest residents to raise money for healthcare and to help low income earners and retirees, Reuters reported, while Hong Kong has raised tax allowances and waived business fees to help the lower-paid.  
 

Singapore’s Finance Minister Tharman Shanmugaratnam announced in the 2015 budget that personal income tax in the highest bracket, above SGD 320k (USD 235k) will increase from 20% to 22%, for income earned in 2016.

 

Singapore’s low income tax is widely seen as a factor in helping it to become a major financial centre, but proposed universal health coverage is expected to push up spending by up to 44% between now and 2020, according to the Financial Times.

 

Individuals will receive a 50% rebate on the tax they pay this year on 2014 income, with a cap of SGD 1k, Reuters said.

 

In Hong Kong, personal tax has been reduced by as much as HKD 20k (USD 2,600), with extra allowances for the lowest paid for the elderly, and with some tourism fees on travel agencies, hotels, guesthouses, restaurants and food stalls waived for six months, Associated Press said.

 

Taxes on business profit have also been reduced by up to HKD 20k, while child allowances will be raised to HKD 100k from the current HKD 70k, theWall Street Journal said.

 

Singapore has also attempted to boost retirement plans with moves to encourage higher contribution rates to the Central Provident Fund – a compulsory savings plan for Singaporean workers – by middle-income earners, and increased interest rates for older citizens to boost low savings balances.

 

The next election in Singapore does not need to be held before January 2017, but Reuters reports speculation that it may be called soon, after Singapore’s 50th anniversary of independence in August.

 

Pinsent Masons

 

For further information, please contact:

 

Jason Collins, Partner, Pinsent Masons

jason.collins@pinsentmasons.com

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