Public Finance
Government spending in Singapore has risen since the start of the global financial crisis, from around 15% of GDP in 2008 to 17% in 2012. The government's total expenditure as a percentage of GDP ranks among the lowest internationally and allows for a competitive tax regime. The government has no foreign debt and consistent budget surpluses. Singapore government debt is issued for investment purposes, and not for fiscal needs.
Personal income taxes in Singapore are among the lowest in the world, ranging from 0% to 20% for incomes above S$320,000. There are no capital gains or inheritance taxes in Singapore. Singapore attracts entrepreneurs, and established corporations from around the world, with a corporate tax structure that encourages startups and provides incentives for international business. The corporate tax rate of 17% is low relative to other developed nations. Singapore has a single-tier corporate income tax system, which means there is no double-taxation for shareholders.
Singapore introduced Goods and Services Tax (GST) with an initial rate of 3% on 1 April 1994, increasing government's revenue by S$1.6 billion (US$1b, €800m) and estabilising government finances. The taxable GST was increased to 4% in 2003, to 5% in 2004, and to 7% in 2007.
The Singapore government owns two investment companies, the Government of Singapore Investment Corporation and smaller Temasek Holdings, which act as the nation's sovereign wealth funds. Both operate as commercial investment holding companies independently of the Singapore government, but Prime Minister Lee Hsien Loong and his wife Ho Ching serve as Chairman and CEO of these corporations respectively. Temasek Holdings holds around S$60 billion of assets in Singapore, holding majority stakes in several of the nation's largest companies, such as Singapore Airlines, SingTel, ST Engineering and MediaCorp.
Read more about this topic: Taxation In Singapore
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