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Economy of Singapore and Singapore's Tax System

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Every country has its own tax system, except five, The United Arab Emirates, The Bahamas, Bermuda, Andorra, Monaco. My topic is economic analysis of Singapore. Singapore is located in Asia and belongs to southeast Asia. Moved south of Malaysia. Its location is 1 ° 22 ‘N, 103 ° 48’ E, between Indonesia and Malaysia. East of Singapore face to the south China sea, west is the Indian Ocean. In 1819, the British established Singapore as a trading colony. It joined the Malaysian federation in 1963 but was expelled and independent two years later. There is a famous strait that connects the South China Sea to the Indian Ocean. Singapore’s achievements today are closely linked to the Singapore Strait. There are 500 merchant ships going to and from the Singapore strait every day, about 80 percent of them going to Singapore for resupply, shopping. Many countries have set up economic and trade offices in Singapore. Its fastest growth came in the 1980s when it was dubbed the Asian tigers (Singapore, Hong Kong, Taiwan, South Korea). Singapore subsequently became one of the most prosperous countries in the world, has a strong international trading link (in terms of tonnage, Singapore port is one of the world’s busiest port), the per capita gross domestic product (GDP) and western main countries.

Singapore is located in the tropics, controlled by the equatorial low belt, as the equatorial rainy climate, long summer without winter, the temperature in the temperature difference and temperature difference is small, the average annual temperature in 75 ° Fahrenheit (24° Celsius) to 94°Fahrenheit (34° Celsius) between most of January, affected by the northeast monsoon winds from China, a relatively dry northeaster will make Singapore average temperature hovers around 73 to 75 degrees Fahrenheit or so, and it will be better, Between April and May, temperatures will rise slightly and rainfall will increase. Humidity is high, with an average daily relative humidity of 84%. Rainfall is sufficient and thunderstorms are frequent. The annual rainfall is around 2,400 millimeters. It is rainy from November to January every year. In addition, the average temperature of Singapore is significantly higher than that of its tropical neighbors due to the rapid development of urban areas over the decades, which has affected the whole country by the heat island effect. According to statistics, by July 15, 2018, the population of Singapore was 5,951,112. There are four main ethnic groups, including Chinese 74.3%, Malay 13.4%, Indian 9%, other 3.2%. Religions including Buddhist 33.2%, Christian 18.8%, Muslim 14%, Taoist 10%, Hindu 5%, other 0.6%, none 18.5% (2015 est.) There is 277.7 square miles (719.2 square kilometers) area in Singapore, including land area 273.8 square mile (709.2 square kilometers) and 3.9 square miles (10 square kilometers) water area. There are three famous colleges in Singapore, they are National University of Singapore (NUS), Nanyang Technological University (NTU), and Singapore Management University (SMU). Many languages are spoken in Singapore. Including English, Chinese (Mandarin, Cantonese, Fujianese and so on), Indo, Malay and Indonesian.

English is the official language in Singapore. Singapore Currency: Singapore Dollar, Symbol $ and cent S¢. Frequency used: $1, S¢5, S¢10, S¢20, S¢50; $2, $5, $10, $50. Rarely used: $1, $20, $25, $100, $500, $1000, $10000 and S¢1. Exchange rate 1 usd = 1.5 sgd Singapore offers a well-functioning, efficient and corruption-free legal system. The system is designed to ensure that your rights and contracts are honored and disputes can be resolved quickly and cost-effectively. Singapore has a highly developed and successful free market economy. It enjoys a very open and non-corrupt environment, stable prices and a per capita GDP higher than that of most developed countries. Unemployment is low. Singapore’s economy is heavily dependent on exports, particularly electronics, petroleum, chemicals, medical and optical equipment, pharmaceuticals and the country’s vibrant transport, commercial and financial services industries. Fiscal policy of Singapore Fiscal policy uses government spending and income to influence the economy. The two main tools of fiscal policy are government spending and taxes. In Singapore, the long-term goal of fiscal policy is:

  • promote and support sustained, non-inflationary economic growth;
  • maintaining a balanced budget, i.e., funding the total operating and development expenditures from operating income during the business cycle; and
  • focus government spending on programs that provide basic public goods and services, such as education, health care, infrastructure, housing and environmental protection.

These objectives are based on a recognition of the role of market forces in promoting economic, financial prudence and an emphasis on human and infrastructure investment. The tax policy of Singapore Tax policy is an integral part of fiscal policy. The main objectives of Singapore’s tax policy are:

  • increased income This is the traditional goal of tax policy. Taxation is an important source of funds for government operations.
  • Promote economic and social goals Taxes are used to influence people’s behavior toward desirable social and economic goals.

To encourage mechanization and automation, for example, the government allows accelerated capital subsidies for most assets used for commercial purposes. Tax rebates encourage Singaporeans to have more children. The basic principle of Singapore’s tax policy is to remain competitive with businesses and individuals. Keeping interest rates competitive will help us continue to attract foreign investment. Keeping interest rates low will encourage our people to work hard. It will also make risk-taking worthwhile and encourage entrepreneurship. To increase the flexibility of taxation as a source of government revenue, a goods and services tax was introduced in 1994.This balanced mix of taxes on consumption and income reduces the vulnerability of tax revenues to adverse changes in the economic environment and enhances the resilience of Singapore’s fiscal position. The Inland Revenue Authority of Singapore (IRAS), was established in 1960, formerly known as the inland revenue department. It integrates all the major revenue collection agencies into one organization, making the management and collection process more streamlined and better managed. IRAS is also known for being efficient tax administrators and service friendly tax collectors.

The inland revenue department is responsible for the collection of income tax, property tax, goods and services tax, inheritance tax (abolished on 15 February 2008), gambling tax and stamp duty. As a key tax official at the Treasury, IRAS has played a role in the formulation of tax policies, providing policy input, as well as the technical and administrative impact of each policy. The IRA also actively monitors developments in the external economic and tax environment to identify areas for policy review and change. Its aim is to create a competitive tax environment that encourages business and growth. Other non-revenue functions performed by IRAS include negotiating tax agreements on behalf of the government, advising on property valuation and drafting tax legislation. Singapore also uses a progressive resident tax rate, but it starting at 0% and ending at 22% above S$320,000. There is no capital gain or inheritance tax. individuals are taxed only on the income earned in Singapore. The income earned by individuals while working overseas is not subject to taxation barring few exceptions. In most part of the United State, we have double taxation (both federal and state/local taxes). Singapore is a small country; the taxpayer just pays the government tax.

Types of taxes as below: v Income tax Income tax is levied on the income of individuals and companies. v The property tax, Property tax is levied on property owners according to the expected rental value of the property. v Inheritance tax (exemption from death on or after 15 February 2008) The estate tax is levied on the value of the deceased’s net worth exceeding the threshold. v Motor Vehicle tax These are taxes on the motor vehicle, not on imports. The tax is aimed at controlling motor vehicle ownership and road congestion. v Tariffs and excise taxes Singapore is a free port with relatively low excise and import taxes. The excise tax is mainly levied on tobacco, petroleum products and alcohol. Moreover, few products are subject to import taxes. The duties are mainly applied to cars, tobacco, alcohol and petroleum products. v Taxes on goods and services Consumption tax is a consumption tax. Taxes are paid when money is spent on goods or services, including imports. v Gambling tax, These are private lotteries, gambling and lotteries. v Taxes on casinos The casino tax is a new tax on casino revenues. v Stamp duty, This is imposed on commercial and legal documents relating to stocks and real estate. v Other These include foreign labor tax, annual tonnage tax, water saving tax and development tax.

Filing Tax as below: Companies: Filing Taxes (Form C-S/C), Tiling Estimated Chargeable Income (ECI) Self Employed/Sole Proprietors/Partners: Filing Taxes (form B/B1) Employer: All employers are required by law [S68(2) of the Income Tax Act] to prepare Form IR8A and Appendix 8A, Appendix 8B or Form IR8S (where applicable) for all your employees who are employed in Singapore by 1 Mar each year. Employers need not submit the forms to IRAS. Even though Singapore has many good policies and environments for business, including tax policy and a clean and efficient government. It’s a great place to do business. But as mentioned above, Singapore strait is the biggest economic lifeline of Singapore. Once this economic lifeline is broken, the economy of Singapore will suffer a fatal blow. Because it is said that a Chinese consortium is planning to dig a canal ( Kra canal) which directly into the Indian Ocean in the gulf of Thailand. The ship’s journey through the Kra canal is two to three days shorter than via through the Singapore strait. As shown in figure. Many ships are expected to pass through the Kra strait. Singapore’s economy will never recover. Therefore, if I am the CEO of the company, I would not consider opening a company in Singapore.

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Economy of Singapore and Singapore’s Tax System. (2019, April 10). GradesFixer. Retrieved May 27, 2022, from https://gradesfixer.com/free-essay-examples/singapore-and-singapores-tax-system/
“Economy of Singapore and Singapore’s Tax System.” GradesFixer, 10 Apr. 2019, gradesfixer.com/free-essay-examples/singapore-and-singapores-tax-system/
Economy of Singapore and Singapore’s Tax System. [online]. Available at: <https://gradesfixer.com/free-essay-examples/singapore-and-singapores-tax-system/> [Accessed 27 May 2022].
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