In the first of our series covering Singapore’s 2022 budget, we look at the new tax measures impacting businesses and individuals in the city-state.
On February 18, 2022, Singapore unveiled its S$109 billion (US$80 billion) 2022 budget which provides a slew of tax hikes for higher-income groups and an expected increase in the goods and services tax in 2023.
The moves come as Singapore emerges from an economic slump as the government has committed over S$100 billion (US$74 billion) over the last two years to cushion the economy from the impact of the pandemic.
Singapore’s Finance Minister Lawrence Wong announced that this year’s budget will run up an expected deficit of S$3 billion (US$2.2 billion) or 0.5 percent of GDP, down from the S$5 billion (US$3.7 billion) deficit in 2021 and lower than earlier estimates of S$11 billion (US$8.1 billion). Further, the government will draw S$6 billion (US$4.4 billion) from Singapore’s vast reserve to fund the COVID-19 public health measures.
The economy grew 7.4 percent in 2021, rebounding from a pandemic-induced 5.4 percent contraction in 2020, and is expected to expand three to five percent for this year. Still, recovery is expected to remain uneven, especially for the aviation and tourism industries, which will take longer as concerns over the virus and new variants remain.
The top marginal personal income tax (PIT) will be increased for the 2024 year of assessment (YA).
The goods and services tax rate (GST), also known as the value-added tax (VAT) will be increased in two steps:
With the growth of the online travel booking industry, the government aims to ensure the GST system remains resilient in supporting the industry.
This article was first published by AseanBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected]