Here are the taxes that will increase under the proposed 2022 budget
Most of the tax hikes will be implemented in 2023.
The Singaporean government will impose several tax changes starting this year, which Morgan Stanely said is aimed at reducing income inequality in the state, as well as supporting continued political and social stability and market confidence in Singapore equities.
Under the proposed 2022 budget, these are the taxes that will be raised and by how much they will be increased:
- Property Tax: 6%-32% for owner-occupied homes; 12%-36% for non-owner-occupied homes (2023)
- Income Tax: 23%-24% on annual income in excess of $0.5m (2023)
- Carbon Tax: $25 per tonne (2024); $45/tonne (2026); $50-$80/tonne (2030)
- GST: 8% (2023); 9% (2024)
- Car taxes: Higher registration fees for cars with an open market value in excess of $80,000 (2022)
Meanwhile, the government said it’s also mulling a 15% Minimum Effective Tax Rate for large multinationals.
Amongst the hikes to be imposed by the government, Morgan Stanley said property tax will likely have a negative impact, particularly on property developers who “have had to contend with higher stamp duties” since December 2021.
The increased carbon tax, on the other hand, will improve “opportunities for energy/utility firms planning to develop a carbon credit marketplace and carbon consulting services,” Morgan Stanley said.
In the budget hearing, property tax was announced to be raised instead of estate duties or net wealth taxes which would have been good for Singapore banks and their growing wealth businesses,” according to the analyst.
Whilst the government increased a lot of taxes, Morgan Stanley believes it’s still good news that no estate duties or net wealth taxes were announced, which they see as a “positive for Singapore banks and their growing wealth businesses.”