By Dee Lim
Taxes are inevitable, so make sure you know which ones you'll need to pay.
At some point in our lives, we have to pay taxes, but do you know what your tax dollars are being used for and what are some of the taxes that you're likely to pay?
For the most part, the revenue collected from taxes goes back into funding what the government spends on. This changes from year to year, depending on what's needed.
The majority in the 2021/2022 financial year (FY2021/2022) went towards money used in the social development sector, which invests back into the population.
Money is also set aside yearly for use in the security and external relations sector, which handles defence, home and foreign affairs. There's also an amount that goes towards the economic development sector and government administration.
Here are some of the basic taxes and fees you are likely to pay as an individual:
1. Income Tax
As its name says, this is the tax that you pay on the income you earn, and is calculated as a percentage of your annual income. There are ways to get deductions from your income tax, including charity donations, the parenthood tax rebate, or the working mother's child relief, among others.
2. Good and Services Tax (GST)
GST is currently at eight per cent, and will rise to nine per cent in 2024.
3. Property Tax
This is imposed on any properties that you own. Keep in mind that if you're renting out a property that you own, you'll need to pay property tax and income tax on the rent that you're earning.
In 2023, property tax for most residential units is set to increase due to a rise in annual values.
4. Stamp Duty
There's quite a bit of legal paperwork involved when dealing with property, and stocks and shares, and stamp duty is the fee you pay for having those documents processed. This includes lease/tenancy agreements, transfer documents for property and mortgage agreements.
5. Motor Vehicle Tax/Fees
As part of owning a car in Singapore, you will have to obtain the Certificate of Entitlement (COE) when you first purchase the car. The COE gives you the right to own a car for 10 years – you'll also have to factor in the road tax that you pay to drive the vehicle on Singapore roads. These two vary depending on market conditions (for COE), and the type of car that you drive (for road tax).
These are just some of the taxes that are applicable to most people – there are other taxes if you're also a business owner. If you're unsure about the taxes that you need to pay or the processes, reach out to the Inland Revenue Authority of Singapore.