Singapore’s personal income tax rate remains among the lowest along with Macau and Hong Kong. KPMG’s latest Individual Income Tax and Social Security Rate Survey 2012 shows that the global average top personal income tax rate has gone up by 0.3 percent. It is only the third time that it is increase over the past 10 years.
The report showed that many economies deemd it necessary to increase their highest rate of personal income tax either through the creation of new income tax rate bands for very high income earners or the introduction of temporary taxes to address immediate budgetary deficit concerns.In Asia, rates remained constant among China, Japan and India. They have not altered their top rate of tax in the last ten years while within South-east and East Asia, Singapore’s tax rate remains among the lowest.
The taxable income level at which the highest individual tax rate kicks in is at S$320,000 or about US$261,800(S$322,498.30).
For many multinational companies looking to locate their senior staff to this region, the two competing locations are Hong Kong and Singapore.
In Singapore, at an income level of US$100,000, the effective income tax rate is 6.3 per cent with a further 13.9 per cent going towards the Central Provident Fund (CPF).
In Hong Kong, this is 12.6 per cent going towards income tax.
At an income level of US$300,000, 14.1 per cent will go towards income tax and a further 4.4 per cent will go towards CPF.
In Hong Kong, the effective income tax rate is 15 per cent.
South Korea has also introduced an additional tax band with a 3 per cent increase in an effort to target high earners as a source of additional revenue.
The most prominent examples of increases pointed out in the survey are seen in Europe.
In France, reforms are seeing the introduction of two new tax rate bands for high income earners resulting in the top rate increasing from 41 per cent to 45 per cent.
Starting in January 2012, Spain’s “complimentary tax” aims to help address the country’s public deficit and ranges from 0.75 per cent to 7 per cent depending on the individual’s income level.
Elsewhere in Europe, there was very little change as Western Europe continues to have the highest personal tax rates of any sub-region globally at 46.1 per cent.
While there were no changes to top federal rates in the United States in 2012, the Bush Tax Cuts are scheduled to expire at year’s end.
If the expiration remains on schedule, the top US Federal tax rate would increase from 35 per cent to 39.6 per cent in 2013.
Source :- BUsiness AsiaOnline