Singapore finance minister Lawrence Wong on internet wealth taxes

SINGAPORE — Singapore desires to introduce internet wealth taxes and is learning the potential of making these with higher means pay extra, Finance Minister Lawrence Wong advised CNBC on Monday.

Nevertheless, the minister pointed to the challenges of such wealth taxes, which might inevitably trigger cash to circulation away from Singapore.

As a part of its 2022 funds, Singapore on Friday elevated taxes for greater earners, together with duties on actual property and motor autos, to make sure that those that make more cash pay extra.

Singapore, a wealth administration hub, is taking a look at a broad vary of wealth taxes “very carefully,” Wong stated. They embrace taxes on capital beneficial properties, dividends and a internet wealth tax on people.

“However the problem with these kinds of wealth taxes is that wealth and monetary flows are extremely cell. And if we have been to maneuver however different jurisdictions don’t have comparable taxes, it is extremely simple for wealth to maneuver away from Singapore to a different location,” Wong advised CNBC’s Martin Soong.

Among the many adjustments introduced on Friday have been tax charge will increase for high earners that can have an effect on the highest 1.2% of taxpayers. It is anticipated to generate $170 million Singapore {dollars} in extra tax income per 12 months, in accordance with Singapore’s finance ministry.

On high of these concerns, it may be a “very complicated train” to estimate wealth of people, Wong added.

He stated throughout Friday’s funds speech that “ideally, we’d wish to tax the web wealth of people. However such a tax shouldn’t be simple to implement successfully.” He identified that different international locations additionally face challenges doing so.

Germany, France and Denmark have stopped levying taxes on people’ internet wealth, with the variety of OECD international locations that achieve this dropping from 12 in 1990 to solely 3 in 2020, Wong stated Friday.

“So we proceed to check these choices. We do not rule something out in that sense,” he advised CNBC. “However I believe we additionally need to be sensible and that is why within the funds, we determined to impose … wealth taxes by way of … the present means, which suggests property and luxurious vehicles.”

Property taxes will likely be raised from between 10% to twenty% for non-owner-occupied properties, to 11% to 27% in 2023. In 2024, these will likely be additional elevated to 12% to 36%. Increased taxes may also be levied on luxurious vehicles.

Presently, property taxes are Singapore’s “principal technique of taxing wealth,” Wong stated in his funds speech.

The finance minister additionally addressed the impression of the 15% world minimal company tax charge on Singapore, identified for being one of the vital tax-friendly international locations to companies.

Nations within the Group for Financial Cooperation and Improvement agreed to a world minimal company tax charge of 15% in October final 12 months. The deal, which is able to kick in 2023, will “reallocate” $125 billion in earnings from 100 of the world’s largest firms to international locations worldwide, the OECD stated.

“However now we have by no means relied solely on taxes to compete for investments,” Wong advised CNBC. “What it means for [Singapore] is that now we have to redouble our efforts to strengthen our non-tax aggressive elements.” That may embrace the city-state’s infrastructure, the capabilities of its workforce and total strengthening its enterprise surroundings to be extra engaging, he stated.

“We’re decided to be sure that Singapore stays probably the greatest locations on this planet for enterprise,” Wong stated.

A fairer and extra progressive manner of tax contributions will assist to carry Singapore’s society collectively because it enters a brand new post-pandemic future that is set to be extra risky, stated Wong.

“We’re not in opposition to folks doing higher, incomes extra and accumulating wealth. In no way these are good issues,” he advised CNBC.

“However as a part of our renewed and strengthened social compact, we do need everybody to pay … contribute their share of taxes — and people with higher means ought to contribute a bigger share,” Wong added.

— Clarification: The story and headline have been up to date to make clear that Singapore’s finance minister was referring to levying taxes on people’ internet wealth.