Taxation in Singapore budget 2008 encouraged enhanced competitiveness and also aimed at attaining economic growth, which is sustainable. Taxes were also reduced for facilitating research and development work. The write up below throws light on the taxation system in Singapore after the budget 2008.
Policies pertaining to taxation in budget 2008 have been propounded to increase competitiveness. Taxation in budget 2008 evoked a mixed response among the people of Singapore. In the budget speech of FY 2008-09(1st April, 2008 to 31st March, 2009), the Finance Minister unraveled benefits pertaining to corporate income as well as tax benefits for the people belonging to the services sector.
Singapore’s budget surplus was predicted at S$6.4 billion equivalent to USD$4.5 billion. However, the surplus is anticipated to backslide due to sluggishness in global economy and consequently in Singapore’s economy.
Tax Relief for Corporate Sector :
Tax relief for the corporate sector encourage entrepreneurs. The salient features are as follows :
As per new policies pertaining to taxation in budget 2008, tax exemption is applicable till the time 10% of stakes are held by an individual. The “corporate entities” are entitled to own the rest of the shares.
The shipping firms have been allowed a tax rate at a concession of 5% to 10% depending on the earnings from activities related to leasing.
Insurance firms, which have a license will be able to avail of a tax rate at a concession of 10% depending on the income they earn by selling insurance products.
Tax Relief for Personal Income Tax Payees:
The personal income tax did not change and continued to be at 20%, quite contrary to what the budget analysts had reckoned. They anticipated that the rate would decrease to 18%. Reports state that the cost incurred by the government would be $380 million.
The government has lifted estate duty. With regard to imposing tax on vehicles, the government’s Land Master Plan envisages that the tax structure related to vehicles need to be shifted to usage from ownership. By adopting the above, the government is likely to lose out on revenue by $0.5 billion in the FY 2008.