Singapore’s appeal as a low tax environment for expatriates may shortly something of the past, if the prime minister’s plans to raise taxes are implemented.
As with many top expatriate destinations, it is Singapore’s low tax rate that is commonly named as one of the top reasons why expats flock to the city state in search of overseas work experience. However, the rapidly aging local population is creating a significant tax burden on the government and Prime Minister Lee Hsien Long recently publicly stated that he does not believe that rates can stay so low in the city. Describing his view of the future, he said: “As our social spending increases significantly, sooner or later, our taxes must go up. Not immediately, but if we are talking about 20 years, certainly within that 20 years, whoever is the government will at some point have to raise taxes because the spending will have to be done.”
At present, expatriates living in Singapore benefit from a top tax rate of just 20 percent and this, coupled with low crime rates, a high standard of living and child-friendly environment, continues to draw expatriates in their droves. A recent survey by headhunters Astbury Marsden revealed that investment bankers from the United Kingdom favor Singapore as an expat destination over New York as it offers access to higher wages and lower tax rates. Of the bankers questioned as part of the research, 31 percent said that their location of choice would be Singapore. This compared with 20 percent opting for New York, 19% choosing London and 16 percent saying that they would prefer to be based in Hong Kong. Describing the results of the survey, Mark Cameron, chief operating officer at Astbury Marsden, said: “Cities like Singapore and Hong Kong have been quick to capitalize on setbacks in London and New York, courting investment banks and reacting to demand from expats and tourists for facilities such as sporting, music and other international events.
“This has made them popular destinations for expat investment bankers and hedge fund staff.”