Think You'll Be Paying Lesser Income Tax Elsewhere? Think Twice!
 
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Think You'll Be Paying Lesser Income Tax Elsewhere? Think Twice!

Jacqueline Yan
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With the year passing by so quickly and approaching December, some of you might be finding ways to reduce your assessable income.

While you’re at it, you might be thinking that you’re paying a little bit too much tax…

Singapore so expensive already… How to pay tax??

globe

Thinking of migrating out of Singapore for greener pastures with lower income tax rates? Think again…

Living and working overseas might sound really attractive, but some things are just better at home.

So before you decide which country you wish to migrate to, you might want to look at our comparison of the different income tax rates around the world.


TL;DR: Which Country Has The Lowest Income Tax?

Here’s an income tax comparison for some countries around the world. You might be shocked to learn that as Singaporeans, we do in fact pay one of the lowest income tax rates.

income tax comparison around the world

For ease of comparison, we’ll be looking at the yearly assessable income equivalent of S$100,000. All currency conversions are estimations and rounded up.

CountryIncome Bracket (aprox. equivalent to SGD 100K) Maximum Personal Income Tax Rate
(Based on approx. SGD100k)
Projected Personal Income Tax PaidPercentage of Income Taxed
Asia
ThailandTHB2,200,00030%THB425,00019.3%
South Korea85,500,000 KRW24%15,300,000 KRW17.9%
Japan¥8,000,00023%¥1,204,00015%
TaiwanNT$2,200,00020%NT$548,40024.9%
Malaysia$300,000 MYR24.5%$59,150 MYR19.7%
Singapore$100,000 SGD11.5%$5,650 SGD5.65%
Oceania
Australia$106,000 AUD37%$26,717 AUD25.2%
New Zealand
$115,000 NZD33%$28,870 NZD25.1%
North America
USA$73,400 USD22%$12,087 USD16.5%
Canada $96,000 CAD26%$17,101 CAD17.8%
Europe
Germany €66,00042%€23,86836.2%
United Kingdom £57,000 GBP40%£10,300 GBP18.1%
Netherlands €66,00038.1%€24,85037.6%

Tax Comparison Across Various Continents

While a handful of countries uses a flat tax system with a constant marginal income tax rate, most of the countries have adopted the progressive tax system.

With this system, individuals with lower income will need to pay a lower percentage of their income as tax, while the higher income groups have a higher income tax rate as their income increases.

The countries selected in this comparison work on a progressive tax system, hence, the actual amount of income tax paid does not reflect the maximum personal income tax rate based on the $100,000 SGD.

Furthermore, some of these countries have a provincial income tax or other compulsory payments that accompany their personal income tax payment, which is not included in our calculation.

Asia

CountryIncome Bracket (aprox. equivalent to SGD 100K)Maximum Personal Income Tax Rate
based on approx. SGD 100k
ThailandTHB2,200,00030%
South Korea85,500,000 KRW24%
Japan¥8,000,00023%
TaiwanNT$2,200,00020%
Malaysia$300,000 MYR24.5%
Singapore $100,000 SGD11.5%

Out of all the countries listed in the table, Singapore has the lowest percentage at 11.5% while Thailand has the highest income tax of 30% for THB2,200,000, an approximately equivalent of $100,000 SGD.

thailand flag

Wondering where that Thai tax goes? Part of it goes to the Social Security Scheme in Thailand. With its first implementation in 1991, the objective of the Social Security Act is to guarantee benefits for insured persons and to relief difficulties.

Such benefits include, but are not limited to, disability pensions, old-age benefits, maternity benefits, and unemployment benefits.

malaysia flag

The country with the second-highest income tax rate, in Asia, is Malaysia. With an income tax rate of 24.5% for a yearly income of $300,000 MYR. Part of that tax money goes towards the 1Malaysia People’s Aid (BR1M), which has been replaced by the Bantuan Sara Hidup (BSH). First introduced in 2012, this programme aimed to ease the living expenses of the lower-income group in Malaysia.

Oceania

CountryIncome Bracket (aprox. equivalent to SGD 100K)Maximum Personal Income Tax Rate
based on approx. SGD 100k
Australia$106,000 AUD37%
New Zealand
$115,000 NZD33%

australia flag

Down undah in Australia, one would have to fork out 37% of income tax for a yearly income of AUD$106,000. Some of these taxes will fund social welfare payments administered by Centrelink, a branch of the Department of Human Services, as part of the country’s social security.

North America

CountryIncome Bracket (aprox. equivalent to SGD 100K)Maximum Personal Income Tax Rate
based on approx. SGD 100k
USA$73,400 USD22%
Canada$96,000 CAD26%

usa flag

Between USA and Canada, the Canadians would have to pay slightly more income tax for a yearly income of $100,000 SGD equivalent. They are forking out 26% as compared to 22% for the Americans.

If you’re wondering where Canadian tax dollars go, some of it funds the facilities and services that residents enjoy. Alongside that, other tax dollars go to social programmes such as Old Age Security payments and the Canada Child Tax Benefit.

Europe

CountryIncome Bracket (aprox. equivalent to SGD 100K)Maximum Personal Income Tax Rate
based on approx. SGD 100k
Germany €66,00042%
United Kingdom £57,000 GBP40%
Netherlands €66,00038.1%

Out of the three European countries listed, Germans pay the steepest amount of 42% income tax for a yearly income of €66,000.

That’s almost half an individual’s income!

germany flag

German income tax contributes to many things, from education to healthcare.

The fact that Germans pay so much is probably why they have one of the most comprehensive healthcare systems in the world. It’s also worth noting that the tax also pays for universal healthcare, which ensures everyone living in Germany has access to basic health insurance.

Conclusion

Surprised?

While there are many other considerations to factor such as population and geographical size of the country, Singapore does, in fact, have one of the lowest tax rates in the world for a first-world nation.

You might wonder, what does the government do with our tax? The Singapore government, like most of the countries listed, spends most of our tax dollars in different areas such as infrastructure and education spending.

So some way or another, we would still somehow benefit from our tax contributions.

So let’s not complain too much lah.

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About Jacqueline Yan
Full-time coffee nerd playing the personal finance game to feed her insatiable wanderlust.
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