Pre-Budget Brief Singapore

Transcription

1 Pre-Budget Brief 2019 Singapore

2 Contents Economic indicators 1 Economic trends 2 Singapore tax rates a history 3 Co rporate tax Prevailing corporate income tax rates in selected jurisdictions 5 as at 1 January 2019 Personal tax Personal income tax rates in selected jurisdictions in the region 7 Comparison of effective income tax rates (in percentages) in selected 8 jurisdictions with employment income of S$75,000, S$100,000, S$200,000 and S$400,000 Break-even salary to pay no Singapore income taxes for 9 Year of Assessment (YA) 2019 Progressive personal income tax system 10 Personal income tax rates for YA 2016, YA 2017 and subsequent YAs 11 Common personal income tax reliefs 12 Central Provident Fund (CPF) rates 13 Comparative analysis (2018/2019 Hong Kong versus Singapore 14 YA 2019 tax rate) Goods and services tax (GST) Prevailing standard GST/VAT rates in selected jurisdictions 16 as at 1 January 2019

3 Economic indicators Over the first three quarters of 2018, total government budget expenditures rose by 5% compared to the same time period in Operating expenditures rose by 2%, backed by spending on social development and security and external relations. Development expenditures, which account for slightly more than a quarter of the overall budget, rose by 14% in the first three quarters of 2018 compared to the same period in 2017, primarily driven by spending on economic development. Government operating revenues increased between 3-7% each year between 2015 and In the first three quarters of 2018, revenues rose 13% compared to the same period in 2017, with tax revenues, which accounts for 90% of total operating revenues, increasing by 18%. 1Budget allocation S$b Total for Q1-Q3 2018: S$56.4b Total Operating expenditure Development expenditure 2Government revenue S$b 100 CAGR f: 5.3% Revenues are expected to land slightly higher than expenditures for the full year 2018, with the overall budget deficit forecast to be S$1.2b, or 0.3% of real GDP e 2019f 3Primary budget surplus or deficit % of GDP e f Notes: e = estimate f = forecast 4 Gross % 150% 125% government debt as a percentage of nominal GDP 112% 112% 116% 118% 119% 120% Sources: Accountant-General's Department, Ministry of Finance Singapore Department of Statistics, Haver Analytics (via Oxford Economics) Monetary Authority of Singapore, Ministry of Trade and Industry Singapore, Oxford Economics 100% 75% 2014e 2015e 2016e 2017e 2018e 2019f Pre-Budget Brief

4 Economic trends Real GDP growth versus Consumer Price Index (CPI) % 18 * 2019f GDP: 2.5%* 3 0 CPI: 1.1%* e 2019f Economic growth could moderate from 3.2% in 2018 to 2.5% in 2019 due to a challenging outlook for exports and in the manufacturing sector. Household spending could ease on the back of higher domestic interest rates, though improving labour market conditions will provide an uplift to spending. Lower oil prices could contain inflationary pressures to below 2% per year through Trade (goods and services) S$b * 2019f Exports: S$912b* Imports: S$786b* An increasingly challenging trade backdrop and slowing Chinese import demand could moderate the momentum for exports this year, especially in the electronics sector e 2019f Net international reserves S$b * As of 16 January f: 318.0* Singapore's ample and growing foreign reserves continue to provide a buffer against fiscal pressures and exchange rate and capital flow volatilities e 2019f Real growth by sectors 20% 15% 10% 5% 0% 5% 10% 15% 20% 10.8% 10.7% 3.5% Manufacturing -2.3% -5.1% -4.2% Construction 3.9% 4.0% 2.6% 1.5% 2.0% 0.5% 2.7% 1.2% 2.1% Wholesale and Accommodation retail trade and food services Transportation and storage 1Q18 2Q18 3Q18 9.4% 6.8% 5.6% Finance and insurance 2.6% 2.3% 2.4% Business services Manufacturing continues to face headwinds from weaker Chinese import demand, while a setback in global financial markets could negatively impact financial and trade-related service sectors. Within the struggling construction industry, government investment to boost skills could shift labour-intensive production to more technology-driven "smart" processes. Notes: e = estimate f = forecast Sources: Monetary Authority of Singapore, Ministry of Trade and Industry Singapore, Oxford Economics Singapore Department of Statistics, Haver Analytics (via Oxford Economics) Bank for International Settlements, Haver Analytics (via Oxford Economics) 2 Pre-Budget Brief 2019

5 Singapore tax rates a history Tax rate Year of assessment (YA) Corporate Individual GST Observations: Corporate income tax has been declining whilst GST has been increasing. Individual income tax usually follows corporate income tax but there has been a divergence in recent years. Individual income tax could increase as we look at a more progressive tax system. Notes: The above are the top marginal tax rates. GST commenced on 1 April 1994; the government plans to raise GST by two percentage points, from 7% to 9%, sometime within 2021 to Assumes that there is no change in the corporate income tax and individual income tax rates in Pre-Budget Brief

6 Corporate tax 4 Pre-Budget Brief 2019

7 Corporate tax Prevailing corporate income tax rates in selected jurisdictions as at 1 January 2019 Jurisdiction Australia India Philippines New Zealand China Indonesia Korea Malaysia Japan US Taiwan Thailand Vietnam UK Singapore Hong Kong Germany Ireland (a) (f) 28 25(a) 25(a) (l) 25(a) 24(a) (f) 23.2(a) 21 20(a) (b) (c) 20(a) 20(f) (k) 19(e) (i) 17(g) 16.5(a) 30(a) (h) 30(a) (b) (d) 30(b) (j) % Notes: (a) Certain incomes or companies that meet certain conditions enjoy a lower rate of tax or lower income bands are generally (with exception and/or subject to certain conditions) taxed at lower rates. (b) An alternative minimum tax is applicable. (c) The taxing threshold for taxable income is TWD120,000 i.e., total net income exceeding TWD120,000 is subject to tax, and the income tax payable may not exceed one-half of the taxable income minus the TWD120,000 threshold amount. (d) A higher rate (40%) applies for foreign companies. (e) To be reduced to 17% from 1 April (f) Certain incomes or companies are taxed at a higher rate. (g) Partial tax exemption is available on a specified amount of taxable income. (h) The corporate income tax rate will progressively decrease to 25% for the income year and for subsequent income years for all companies. (i) Different rates apply for ring-fenced profits (from oil extraction and oil rights in the UK and UK continental shelf). (j) A corporate tax reform bill was presented to the Philippines House of Representatives on 21 March 2018, which seeks to reduce the current 30% corporate income tax rate by one percentage point every year beginning 1 January 2019, and provided that the rate will not be lower than 20%; the reduced corporate income tax rate will apply to domestic corporations and Philippine branches of foreign corporations. The bill has, however, not been passed yet. (k) On 8 August 2017, Vietnam s Ministry of Finance announced proposals to lower the corporate income tax rate applicable to micro, small and medium-sized enterprises from 20% to 17% or 15%, effective from 1 January However, the proposal has not yet been enacted. (l) Taxpayers with gross turnover of not more than IDR4.8 billion in a fiscal year are subject to final tax at 0.5% of the gross turnover. The above rates are the top corporate tax rates, excluding dividend withholding tax, surcharges, trade tax, or other state or local taxes etc., where applicable. Pre-Budget Brief

8 Personal tax 6 Pre-Budget Brief 2019

9 Personal tax Personal income tax rates in selected jurisdictions in the region Jurisdiction Australia China Taiwan 40 Japan 45* Korea 42 Thailand Vietnam Philippines India Indonesia Malaysia 28 Myanmar 25 Singapore 22 Hong Kong % Notes: The above rates are the top marginal personal income tax rates prevailing as at December Pre-Budget Brief

10 Personal tax Comparison of effective income tax rates (in percentages) in selected jurisdictions with employment income of S$75,000, S$100,000, S$200,000 and S$400,000 Employment income S$75,000 Employment income S$100,000 Jurisdiction Jurisdiction Australia Australia India India China China Thailand Thailand Malaysia Malaysia Hong Kong 0.00 Hong Kong 0.40 Singapore 1.35 Singapore 2.76 Employment income S$200,000 Employment income S$400,000 Jurisdiction Jurisdiction Australia Australia India India China China Thailand Thailand Malaysia Malaysia Hong Kong 8.00 Hong Kong Singapore 8.02 Singapore Notes: Based on the assumption of a married man with two children, whose wife has no income and that the sole source of income is from his employment. Difference in definitions of taxable income, allowable deductions and like factors can distort effective tax rate comparisons between different jurisdictions. All figures are approximate and based on latest tax rates applicable to tax years ending in calendar year Pre-Budget Brief 2019

11 Personal tax Break-even salary to pay no Singapore income taxes for YA 2019 Single S$ Married with one child S$ Married with two children S$ Annual salary 30,000 37,500 42,500 Personal reliefs Earned income -1,000-1,000-1,000 Wife -2,000-2,000 Children -4,000-8,000 Central Provident Fund (CPF) -6,000-7,500-8,500 Reservist -3,000-3,000-3,000 Chargeable income 20,000 20,000 20,000 Net tax payable Nil Nil Nil Assumptions: Sole source of income is from employment Annual salary is calculated on 13 months Less than 50 years old Wife is not working Active reservist No tax rebate for YA 2019 Pre-Budget Brief

12 Personal tax Progressive personal income tax system Comparison of tax payable on employment income of S$25,000, S$75,000, S$150,000, S$250,000 and S$500,000 over a period from YA 2007 to YA 2019 Effective personal income tax rate YA S$25,000 (%) S$75,000 (%) S$150,000 (%) S$250,000 (%) S$500,000 (%) Assumptions: A married man who is less than 50 years old, has two children, whose wife is not working and whose sole source of income is from his employment. YA 2019 assume no tax rebate is announced in Budget Pre-Budget Brief 2019

13 Personal tax Personal income tax rates for YA 2016 Band S$ Rate (%) 0 20, ,001 30, ,001 40, ,001 80, , , , , , , , , Above 320, Personal income tax rates for YA 2017 and subsequent YAs Band S$ Rate (%) 0 20, ,001 30, ,001 40, ,001 80, , , , , , , , , , , , , Above 320, Pre-Budget Brief

14 Personal tax Common personal income tax reliefs Tax reliefs YA 2019 S$ Earned income relief Below age 55 1,000 Age 55 to 59 6,000 Age 60 and above 8,000 Handicapped earned income relief Below age 55 4,000 Age 55 to 59 10,000 Age 60 and above 12,000 Spouse or handicapped spouse relief 2,000/5,500 Child or handicapped child relief Qualifying child relief (each) 4,000/7,500 Dependent parent or handicapped parent relief Living with taxpayer in the same household (each parent) 9,000/14,000 Not living with taxpayer in the same household (each parent) 5,500/10,000 Handicapped sibling relief 5,500 Course fee relief 5,500 Central Provident Fund (CPF) cash top-up relief By self or employer to self's account Up to 7,000 To spouse, sibling, parents' or grandparents' account Up to 7,000 Foreign maid levy Without foreign domestic worker levy concession Up to 6,360 With foreign domestic worker levy concession Up to 1,440 Grandparent caregiver relief 3,000 National Serviceman (NSman) relief No in-camp training in previous year (non-key appointment holder) 1,500 Attended in-camp training in previous year (non-key appointment holder) 3,000 No in-camp training in previous year (key appointment holder) 3,500 Attended in-camp training in previous year (key appointment holder) 5,000 NSman (wife or parent) relief 750 CPF relief Age 55 and below Up to 20,400 Age 56 to 60 Up to 13,260 Age 61 to 65 Up to 7,650 Above 65 Up to 5,100 Supplementary Retirement Scheme (SRS) relief Singaporean or Singapore permanent resident Up to 15,300 Foreigner Up to 35,700 Note: With effect from YA 2018, the total amount of personal income tax reliefs an individual can claim will be capped at S$80,000 per YA. 12 Pre-Budget Brief 2019

15 Personal tax CPF rates CPF rates for monthly wages S$750 and above, up to a ceiling of S$72,000 for ordinary wages and S$102,000 for total wages Singaporean or Singapore permanent resident* With effect from 1 January 2016 (A) Employees aged 55 years and below Employee 20.0% Employer 17.0% Total 37.0% (B) Employees aged above 55 to 60 years Employee 13.0% Employer 13.0% Total 26.0% (C) Employees aged above 60 to 65 years Employee 7.5% Employer 9.0% Total 16.5% (D) Employees aged above 65 Employee 5.0% Employer 7.5% Total 12.5% * Note: For permanent residents, the CPF rates may be lower in the first two years. Pre-Budget Brief

16 Personal tax Comparative analysis (2018/2019 Hong Kong versus Singapore YA 2019 tax rate) Effective tax rate (%) (210.05, 8.47%) (179.5, 7.02%) Income level (S$ '000) Singapore Hong Kong Notes: Assumes a Singaporean married man with two children, wife has no income and sole source of income is from his employment. Hong Kong calculations for 2018/2019 with marginal tax bands widen from HK$45,000 to HK$50,000 and increase child allowance from HK$100,000 to HK$120,000. Exchange rate used: S$1: HK$ Pre-Budget Brief 2019

17 GST Pre-Budget Brief

18 Goods and services tax (GST) Prevailing standard GST/VAT rates in selected jurisdictions as at 1 January 2019 Asia-Pacific Jurisdiction China 16 New Zealand 15 Philippines Australia Indonesia Korea Vietnam Japan 8(a) Singapore Thailand 7 7(b) Taiwan % Europe Jurisdiction Denmark Sweden Italy 22 Netherlands 21 UK France Germany 19 Switzerland % Notes: (a) The rate will be increased to 10% on or after 1 October (b) Until 30 September 2019, pending an extension of the period by the Thai government. 16 Pre-Budget Brief 2019

19 Notes Pre-Budget Brief

20 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organisation, please visit ey.com Ernst & Young Solutions LLP. All Rights Reserved. APAC No ED None Ernst & Young Solutions LLP (UEN T08LL0784H) is a limited liability partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice. ey.com/sg/tax Follow EY #EYBudgetSem2019