Taxes in Singapore: What Is Tax and Why Do We Pay It?

It may not be something we ‘enjoy’ paying, but it serves a vital purpose in our national economy!

• Taxes are a financial charge on the taxpayer by a governmental organisation, used to help fund public goods and services such as healthcare, education, infrastructure and defence.
• The tax authority in Singapore is the Inland Revenue Authority of Singapore (IRAS), which collects taxes and advises the government on tax policies.
• Taxes are either direct or indirect.

What Is Tax?

Taxation is an obligatory financial charge on a taxpayer (individual or business) by a governmental organisation. Taxes are either direct (paid directly to the government, e.g. income tax) or indirect (passed onto another group or person who ultimately pays it, such as Goods and Services Tax (GST)). Some taxes are a flat percentage rate, whereas others are a progressive rate based on the taxable amount. 

Singapore’s Tax System

The tax authority in Singapore is the Inland Revenue Authority of Singapore (IRAS) – whose responsibilities include collecting personal income tax, corporate tax, GST, property tax, betting taxes and stamp duty. 

A sample tax bill from IRAS. 

Where Do Our Taxes Go?

According to the IRAS, income received from the different types of taxes is pooled together to fund Singapore’s development - "supporting Singapore's economic and social programmes to achieve quality growth and an inclusive society". Areas of key interest include healthcare services, education, infrastructure, defence and recreation.

WHAT IS TAX? COMPLETED. ✅

Sources:

1. https://www.guidemesingapore.com/business-guides/taxation-and-accounting/corporate-tax/industry-specific-tax-incentives-in-singapore#Accordion-Item-Element-14
2. https://www.investopedia.com/ask/answers/060716/why-singapore-considered-tax-haven.asp
   
3. Cover photo from Pexels