Come and discover the Singapore Tax Story at the IRAS Gallery that brings you on a journey through the ages ever since Singapore was founded in 1819. It takes you back to the beginnings of tax through a detailed timeline that stretches through to the present. Get interesting facts on who was the first to introduce taxes in Singapore; when were the different types of taxes introduced; how did the administration of tax transform itself over the past 60 years and more.
Pinkies & the Brains Reflection
Income tax & Private Lotteries Duty
The Inland Revenue Authority of Singapore, in short IRAS, acts as agent of the government to assess, collect and enforce payment of taxes. So what exactly is tax? As we explore the IRAS gallery in Newton Road, we begin to see that tax is essential towards nation-building and the economic development of the country such that it can help Singapore to become a stronger community, provide a better environment and a more vibrant economy for the people.
The amazing thing we found is that, tax is not new. It has been around for the past centuries like the Egypt civilisation and the Qin dynasty in China. The only difference is that in the past, tax was usually paid as a form of tribute demanded by kings and emperors and it was paid in various forms like through produce grown on land or fixed terms of unpaid labour. Whereas now, we paid our tax in cash and it can be done efficiently over the internet.
Tax revenue comes from 10 various types of taxes imposed by the government such as Income Tax, Property Tax, Goods And Services Tax, Betting and Sweepstakes Duties, Private Lotteries Duty and Stamp Duties. Our group had been chosen to explore more on the Income tax and Private Lotteries Duty. So let us take you on the journey to learn more about it.
Income tax
Income tax is a tax chargeable on personal income and companies. It was introduced by the British in 1799 and implemented in Singapore in 1948 by the administration of the Singapore Income Tax Department.
Income tax is a tax chargeable on personal income and companies. It was introduced by the British in 1799 and implemented in Singapore in 1948 by the administration of the Singapore Income Tax Department.
The need to implement income tax in Singapore is due to...
In 1942
WW2 destruction was one of the main caused for the implementation of tax. The main priorities for tax was then to get more revenue to be used for post war reconstruction works, social welfare and education.
In 1946
The British administration apointed Mr R.B. Heasman an expert on tax to introduce it to Singapore. The public opposed to the idea because they feel that it was expensive to implement and that it would raise the decreasing goods price.
1948
Britih disagreed and tax was introduced in Singapore. It commenced at 3% on the first $500 of chargeable income and rise up to 30% in chargeable income in excess of $50,000.
From the new revenue provided by income tax, expenditure on education increased by almost 10 times in 10 years from 1945. Besides that the government also launched efforts to reduce malnutrition and diseases. However despite the increased revenue, Singapore still struggled to solve the major problems like housing and unemployment.
We also found that there are different tax rates applicable for tax residents and non-residents. You will be treated as a tax resident for a particular Year of Assessment (YA) if you are a:
Singaporean; or
Singapore Permanent Resident (SPR) if you have established your permanent home in Singapore; or
Foreigner who stayed/worked in Singapore for 183 days or more in previous year (excludes director of a company).
Otherwise, you will be treated as a non-resident for a particular YA for Singapore tax purposes.
WW2 destruction was one of the main caused for the implementation of tax. The main priorities for tax was then to get more revenue to be used for post war reconstruction works, social welfare and education.
In 1946
The British administration apointed Mr R.B. Heasman an expert on tax to introduce it to Singapore. The public opposed to the idea because they feel that it was expensive to implement and that it would raise the decreasing goods price.
1948
Britih disagreed and tax was introduced in Singapore. It commenced at 3% on the first $500 of chargeable income and rise up to 30% in chargeable income in excess of $50,000.
From the new revenue provided by income tax, expenditure on education increased by almost 10 times in 10 years from 1945. Besides that the government also launched efforts to reduce malnutrition and diseases. However despite the increased revenue, Singapore still struggled to solve the major problems like housing and unemployment.
We also found that there are different tax rates applicable for tax residents and non-residents. You will be treated as a tax resident for a particular Year of Assessment (YA) if you are a:
Singaporean; or
Singapore Permanent Resident (SPR) if you have established your permanent home in Singapore; or
Foreigner who stayed/worked in Singapore for 183 days or more in previous year (excludes director of a company).
Otherwise, you will be treated as a non-resident for a particular YA for Singapore tax purposes.
The individual Tax Rate start at 0% and is capped at 20% (above S$320,000) for residents and a flat rate of 15% for non-residents. As an example, if you are tax resident in Singapore and your personal income for the year was S$160,000; your income tax liability will be S$15, 5000.
Private Lotteries Duty
Private Lotteries Duty was introduced in 1952 to control and levy a tax on all lotteries promoted by private clubs and societies. What does it mean by lottery?
A lottery is any game whereby money is allotted in any manner depending upon chance or lot – examples: Fruit machines, Lucky Draws, Tombola and Bingo. A private lottery is a lottery in which tickets or chances are offered for sale only to members of clubs or societies established for purposes not connected with gaming, wagering or lotteries.
The Private Lotteries Act imposes a duty on any lottery promoted by a club or society. When a club or society conducts a private lottery (including the operation of fruit machines), the promoter of the lottery has to submit audited accounts and pay private lottery duty to Inland Revenue Authority of Singapore. The method of calculating duty, due date for paying duty and submitting audited accounts depends on the type of private lottery organized.
The Private Lotteries Act imposes a duty on any lottery promoted by a club or society. When a club or society conducts a private lottery (including the operation of fruit machines), the promoter of the lottery has to submit audited accounts and pay private lottery duty to Inland Revenue Authority of Singapore. The method of calculating duty, due date for paying duty and submitting audited accounts depends on the type of private lottery organized.
(Taken from IRAS website)
There are 2 types of lottery and they have different due date for payment.
• For one-time lottery: Duty is due within 14 days from the draw date.
Example: If the draw is conducted on 1 Jan 2010, duty has to be paid by 15 Jan 2010.
• For a series of lotteries (e.g. fruit machines): Duty is due within 14 days from the last day of the calendar month in which the lotteries are conducted or the fruit machine is operated.
Example: A club or society that operates fruit machines in Jan 2010 has to pay duty by 14 Feb 2010
• For one-time lottery: Duty is due within 14 days from the draw date.
Example: If the draw is conducted on 1 Jan 2010, duty has to be paid by 15 Jan 2010.
• For a series of lotteries (e.g. fruit machines): Duty is due within 14 days from the last day of the calendar month in which the lotteries are conducted or the fruit machine is operated.
Example: A club or society that operates fruit machines in Jan 2010 has to pay duty by 14 Feb 2010
Penalties will also be imposed if the club/society/promoter of the lottery:
1. Conduct any private lottery without a valid permit;
2. Did not complied with; or any private lottery permit condition
3. Prepares false accounts, with intent to evade the duty chargeable.
For offence (3), the promoter shall be liable on conviction to a fine not exceeding $1,000 or 4 times the amount of duty payable, whichever is higher.
1. Conduct any private lottery without a valid permit;
2. Did not complied with; or any private lottery permit condition
3. Prepares false accounts, with intent to evade the duty chargeable.
For offence (3), the promoter shall be liable on conviction to a fine not exceeding $1,000 or 4 times the amount of duty payable, whichever is higher.
Conclusion
In summary, we as a group feel that tax is an integral part of our nation towards promoting the growth and development of Singapore. Without the implementation of income tax or private lotteries duty, the government would definitely faced many challenges in trying to collect revenue to improve and develop Singapore into a world class city as it is today.
In summary, we as a group feel that tax is an integral part of our nation towards promoting the growth and development of Singapore. Without the implementation of income tax or private lotteries duty, the government would definitely faced many challenges in trying to collect revenue to improve and develop Singapore into a world class city as it is today.
Green & Clean Reflection
Goods and Service Tax & Property Tax
We are rather sceptical of the fact that taxation aids in the building of our nation.
Therefore, when we were handed the GST and Property Tax Question, we couldn't help it but groan! Do not be deceived by our smiles. It was merely for the sake of 'cam-whoring.'
Anyway, these are what we learnt from the IRAS exhibitions...
Goods & Service Tax
Goods Service Tax was a new form of indirection taxation started by the government in 1994 in order to keep our economy competitive. It marked the government’s shift from direct to indirect taxes. With the introduction of GST, the government could afford to reduce taxation on personal income (22%, as of year 2003) and corporate income, thus encouraging entrepreneurship and savings.
The reduction of taxation on corporate income (18%, as of year 2008) would ultimately attract foreign investments and local businesses enjoy a cut in high costs of labour and land. Singapore has an aging population and increasing taxation on personal income would definitely create a burden for most Singaporeans. The introduction of GST would be fairer for all Singaporeans. In 2007, GST rate was increase from 5% to 7%. Additional revenue resulting from this increase was used to fund the new Workfare Income Supplement Scheme (WIS). It is through this scheme that the Singapore government is able to provide income supplements to low wage workers as well as strengthening the economy.
Property Tax
Property tax is one of the taxes that accounts for about 70% of the government’s operating revenue. Introduced in 1961, property tax is a tax on immovable properties, which include house, building and land. Simply put, if one buys a property, one needs to pay property tax for the property. The calculation of property tax is based on the annual rental value of a property.
Therefore, a heavier tax is weighted upon the rich to ensure equal income and well-being distribution among Singaporeans. However, the government do make consensus and grants rebates as when needed. In 2009, in the light of the current global economic downturn, a rebate of 40% on the property tax payable was granted to commercial and industrial properties as part of the Government's relief efforts to help businesses out.
Conclusion
Initially, we did not understand the government's decision to implement GST and subsequently, increasing the GST to 7%. However, our trip to IRAS has answered our questions on the relevance of implementing GST to the public.
We also realised that our Singapore government did make efforts to introduce rebates to help the people during periods of economic crisis.
All Blacks Reflection
Stamp Duties & Betting and Sweepstakes Duty
Stamp Duties
Stamp duty is a tax on executed documents relating to properties or interest in properties and shares or interest in shares. These documents include a lease, sale and purchase, gift or mortgage of property.
The introduction of stamp duties in 1863 helped the government to develop public services. As Singapore transforms into a global shipping hub, stamp duties created additional revenue out of the increased number of legal documents generated by the port’s commerce. As a result, the Colonial administration could balance its books during its rule of Singapore. Even up till now, stamp duties are still evident and contribute to the government’s revenue.
Sweepstakes
Betting and sweepstakes duties are taxes that are levied on lotteries, betting and sweepstakes and it was introduced to Singapore by the British in 1931.
With the increase in government revenue collected from the duties, it is used for building better and wider roads, improve public utilities and harbor facilities, as well as to construct more hospitals and government buildings.
Today, betting and sweepstakes duties still exist so as to ensure that betting activities do not proliferate and undermine good social values. The rate of duty for sweepstakes stands at [30% x (Amount contributed towards the sweepstake - GST*)].