Singapore to enforce new top income tax rate
The Inland Revenue Authority of Singapore is to closely monitor company formation behaviour to ensure that high income earners do not set up companies to avoid the higher personal income tax (PIT) rates announced in the 2015/16 Budget, reports Tax News.
The Senior Minister of State for Finance and Transport, Josephine Teo, announced the initiative when delivering the Ministry of Finance Committee of Supply Speech on March 9. She was replying to comments that the higher PIT rates, including a 22 per cent top rate (compared with the previous highest rate of 20 per cent), could result in lower tax receipts.
Commenting on concerns that high-income earners could attempt to pay Singapore’s lower 17 per cent corporate income tax instead, she made it clear that IRAS “takes the evasion of tax seriously” and will closely monitor the future establishment of companies.
She confirmed that in cases where companies are being set up mainly to avoid PIT, the approach of IRAS is “to disregard the corporate structure and assess the income on the individuals,” and that “the agency will step up its audit programs to detect and deter tax avoidance and evasion.”
