KPMG has recently studied the personal income tax rates globally and noted an interesting find; as most countries increase personal income tax rates to obtain new sources of spending, the global 7 year decline on top personal income tax rates may end soon.
Singapore has the third highest rates of personal income tax amongst all the countries surveyed (with the exception of Switzerland)
However, one should take note that with the effect of current market currency exchange rates, this translates to show that only Singaporeans whose personal taxable income for the year exceeds S$320,000 will be affected. It should be noted as well that to be taxed at 20% is still relatively low for those who earn this much.
The KPMG head of international executive services, Ooi Boon Jin, claims that KPMG’s study shows that there will be an increase in top personal income tax rates during 2010. This is mainly due to governments looking to increase revenue via the expense of members with the highest income brackets.
Denmark currently has the highest tax rates of 62.3 %, which even includes a social security guarantee. The average personal tax rates for the rest of the European continent is down from 2003 by 5.1 % to 36 % in 2009. This is mainly due to various Eastern European countries adapting to flat-rate taxes.
Japan follows the global trail with a whopping 50 % personal income tax rate, the highest in Asia and in the Pacific’s. Rates in other parts of the region are set in a decline from 36.1 % in 2003 to 33.9 % in 2009, with 0.7% coming from the previous year. This drop is mainly influenced by the smaller countries as the giant economies of the continent such as China, India and Japan have not seen fit to lower the rates in the past 7 years.
In regard to dropping their top personal income tax rates in the South East Asian region, Vietnam is in the lead with a 5% decrease (down to 35 %) and Indonesia following closely behind (down to 30 %). Malaysian rates fell 1% to 27 % in 2009 from the previous year.
The most competitive rate drops are between Hong Kong and Singapore, with Hong Kong claiming its place as the lowest tax rate location in the region by dropping its top personal income tax rates by 15 %. In contrast, the Latin American state of Chile has the highest top personal income tax rates in its region (40 %).
This change in the trend of tax rates will pose numerous implications on international assignment programs and will affect global workforce mobility as various Human Resources (HR) professionals become more wary of the higher taxation costs.
As most of the assignees are high income earners, they will usually have the capability, aptitude and flair to take note of the effects migration will have on their personal taxes (in both home and migratory countries). For high income earners who can easily migrate elsewhere with limited consequences, the increase or decrease in personal income tax rates will have a big say in their decision and may impact the trend of global talent mobility.
If you are a high flyer or find yourself in the high income bracket, moving to a country with lower tax rates can mean saving in your tax dollars, if planned correctly. for more information on tax rates in Singapore http://www.rikvin.com/
By setting up your business in Singapore, you will be a part of a country which is not only dynamic in terms of growth but also competitive globally in terms of tax rates. RIKVIN is a professional company incorporation service. Please visit http://www.rikvin.com for more information on moving to or setting up your Company in Singapore.
