Tax Services Singapore
Tax Services In Singapore
Records show that Singapore Income Tax Department was established in 1947 to administer and handle the Income Tax Ordinance of the country that year. However, the actual evaluation of tax only started in 1948 and in the initial Year of Assessment or YA, there were about 40,000 individual tax returns and about 1,000 company returns were submitted to the Department. For the period January 1, 1948 up to December 31, 1948, the department collected $33.2 million.
As Singapore turns as self-government in 1959, it created the Inland Revenue Department in 1960 where there were different revenues handled and collected together by separate agencies.
On August 9, 1965, Singapore obtained its independence and there was a dramatic change showed through its Income Tax Act which took effect in January 1, 1966.
It was in 1970 when the decrees pertaining taxes increased to 12. Mr. Hsu Tse-Kwang became the first appointed local commissioner of the Department. Since then, they concentrated on acquiring resources for training of the staff. Microfilming was introduced in 1972 to save space and lessen the handling of files. The property tax billing and collection were computerized.
The role of the Inland Revenue Department expanded with the fast improvement on the number of the taxpayers which caused for the shortage of the staff in the Department. It resulted to huge backlog of the taxes which were not evaluated and uncollected taxes. Aside from these problems, the Department’s staff was pirated by private corporations due to their expertise, skills and trainings. The Department realized that it needed to take a new direction to resolve the problems.
The Integration of the Inland Revenue Authority of Singapore
Hence, the Inland Revenue Authority of Singapore or IRAS was created by legislation which serves as a statutory board of Ministry of Finance. IRAS was integrated with the IRAS Act to handle the responsibilities which were previously done by the IRD. This integration provided the IRAS the independence to handle its personnel and financial resources. The change aimed at attaining excellent services to Singapore through its effective administration of taxes.
Summary of Tax System in Singapore
- For Nation Development
Singapore wanted to build a stronger nation with a better environment and progressive economy with the help of effective collection of taxes. In Fiscal Year 2012 to2013, taxes were allocated to the following: 49% for Social Development, 43% for Security and External Relations, 5% for Economic Development, and 3% for Administration.
Social development sector includes health, education, social and family development, communications and information, community, youth, culture, environment and water resources, national and manpower development.
- The Fiscal Guidelines
The following are the objectives of the government of Singapore for budgetary policy such as:
- to sustain a balanced budget to fund the entire operating and development expenditures from the operating revenue beyond the business cycle;
- to support a sustained, non-inflationary economic growth; and
- to concentrate on the government’s expenses on bringing the public goods and services such as healthcare, education, housing, infrastructure, and other programs to safeguard the government.
The government also acknowledges the market clusters in the economy’s growth, financial prudence and the importance of human and infrastructure investments.
- The Tax Policy
This tax policy is an essential component of the fiscal policy. Here are the primary objectives of Singapore for the tax policy:
- To raise revenues. This is considered as the traditional objective of fiscal policy to finance the operations of the government of Singapore.
- To promote economic and social goals. Some examples of these are its aim for mechanization and automation where the government permits the increase of capital budget for assets to be utilized in businesses. Another example is that the government provides tax rebates for the first 5 children in the family.
Generally, the basic aim of the tax policy of Singapore is to make tax rates competitive among the individuals and companies. This helps the government to draw good shares of foreign investments. By keeping the tax rates low motivates people to work harder. It also promotes entrepreneurship.
Goods & Services Tax or GST was established in 1994 to enhance the flexibility of the taxes as the government’s primary source of revenue. The incorporation of the tax on consumption and income lowers the susceptibility of revenue to address any economic change in the economic situations and hopes to build up the flexibility of the fiscal position in Singapore.
- The Government Operating Revenues
Tax revenues, charges and fees and other receipts are the government’s primary source of operating revenues. The tax revenue is responsible for the 74.1% of the operating revenue during the fiscal year 2012 to 2013. The most essential is the tax revenue obtained from different imposed taxes of the government such as:
- Income tax which comes from the earnings of the corporations and individuals.
- Property tax is obliged on the owners of properties depending on the expected rental values of these properties.
- The Estate Duty, which was eliminated for death on or after February 15, 2008, is based on the value of the net assets of the deceased in excess of a maximum amount.
- Motor vehicle taxes are taxes obtained on motor vehicles to limit car ownership and road congestion.
- Customs and Excise duties were established on the reason that Singapore is a free port and therefore, should have some excise and import duties. Excise duties are obliged on liquors, tobacco, and petroleum products. Only several products are subjected to import duties.
- Goods & Services Tax refers to the tax imposed on consumption where a tax is paid when your money is used to buy goods and services and imports.
- Betting taxes are duties imposed on sweepstakes, betting, and private lottery.
- Casino Tax is a new tax which is charged to the gross gaming revenue of casinos.
- Stamp duties are levied on commercial and legal documents or records about stock and shares, as well as in fixed properties.
- Other sources of taxes are the foreign workers fees and the airport passenger service charges. The foreign workers’ tax aims at regulating the hiring of foreign workers in Singapore.
Inland Revenue Authority of Singapore is tasked to collect income tax, GST, property tax, estate duties, stamp duty and betting taxes.