Singapore Finance Minister Lawrence Wong on Net Wealth Taxes

SINGAPORE — Singapore wants to introduce net worth taxes and is exploring the possibility of charging more for those with greater means, Finance Minister Lawrence Wong told CNBC on Monday.

However, the minister highlighted the challenges of these wealth taxes, which would inevitably lead to money leaking out of Singapore.

As part of its 2022 budget, Singapore on Friday raised taxes for high earners, including duties on real estate and motor vehicles, to ensure those who earn more pay more.

Singapore, a wealth management hub, is “looking very closely at a wide range of wealth taxes,” Wong said. They include taxes on capital gains, dividends and a wealth tax. individual.

“But the challenge with these types of wealth taxes is that wealth and financial flows are very mobile. And if we were to move but other jurisdictions don’t have similar taxes, it’s very easy for the wealth of moving away from Singapore to somewhere else,” Wong told CNBC’s Martin Soong.

Tax the highest earners

Among the changes announced on Friday were increases in tax rates for high earners that will affect the top 1.2% of taxpayers. It is expected to generate S$170 million in additional tax revenue per year, according to Singapore’s Ministry of Finance.

In addition to these considerations, it can be a “very complex exercise” to estimate the wealth of individuals, Wong added.

He said during Friday’s budget speech that “ideally, we would want to tax the net worth of individuals. But such a tax is not easy to implement effectively.” He pointed out that other countries also have difficulties in doing so.

Germany, France and Denmark have stopped levying personal net wealth taxes, with the number of OECD countries doing so falling from 12 in 1990 to just 3 in 2020, Wong said on Friday. .

“So we’re continuing to look at those options. We’re not ruling anything out in that direction,” he told CNBC. “But I think we also have to be practical and that’s why in the budget we decided to impose…wealth taxes by…existing means, that is to say the real estate and luxury cars.”

We are determined to ensure that Singapore remains one of the best places in the world to do business.

Lawrence Wong

Singapore finance minister

Property taxes will increase from 10% to 20% for non-owner occupied properties, to 11% to 27% in 2023. In 2024, they will be further increased to 12% to 36%. Higher taxes will also be levied on luxury cars.

Currently, property taxes are Singapore’s “main means of taxing wealth”, Wong said in his budget speech.

Doubling non-tax competitiveness

The Minister of Finance also addressed the impact of the global minimum corporate tax rate of 15% on Singapore, known to be one of the most tax-friendly countries for businesses.

Organization for Economic Co-operation and Development countries agreed to an overall minimum corporate tax rate of 15% in October last year. The deal, which will come into effect in 2023, will “reallocate” $125 billion in profits from 100 of the world’s biggest companies to countries around the world, the OECD said.

“But we’ve never relied solely on taxes to compete for investments,” Wong told CNBC. “What this means for [Singapore] is that we must redouble our efforts to strengthen our non-tax competitive factors. This will include the city-state’s infrastructure, the capabilities of its workforce and the overall strengthening of its business environment to be more attractive, he said.

“We are determined to ensure that Singapore remains one of the best places in the world to do business,” Wong said.

Higher taxes as part of a “reinforced social pact”

A fairer and more progressive mode of tax contribution will help keep Singapore society together as it enters a new post-pandemic future that is expected to be more unstable, Wong said.

“We’re not against people doing better, earning more and accumulating wealth — those aren’t good things by any means,” he told CNBC.

“But as part of our renewed and strengthened social pact, we want everyone to pay … contribute their share of taxes – and those with more means should contribute a greater share,” Wong added.

Clarification: The article and title have been updated to clarify that the Minister of Finance of Singapore was referring to levying taxes on the net wealth of individuals.

Comments are closed.