Higher consumption, foreign direct investment, and improved digital services contribute to growth
In FY2023, Singapore’s tax revenue saw a substantial increase, driven largely by a rise in Goods and Services Tax (GST) and corporate income tax collections. According to the Inland Revenue Authority of Singapore (IRAS), GST collections grew by S$1.5 billion, driven by increased consumption and a rebound in international arrivals, contributing 20.5% of total tax revenue, amounting to S$14.1 billion. Meanwhile, individual income tax revenue rose by S$1.3 billion, with higher personal incomes and 83% of the tax collected from individuals earning over S$150,000.
Corporate income tax showed the highest year-on-year growth across all categories, rising by 26.8%, which analysts attribute to a significant surge in foreign direct investment (FDI), up by over 75% in 2021. This increased investment has led to a 17.9% overall rise in total government tax revenue, reaching S$88.13 billion, up from S$74.76 billion in FY2021.
However, not all tax categories saw positive trends. Stamp duty collection fell by 12%, or S$0.8 billion, due to a lower volume of transactions compared to the previous year, representing 8.7% of total tax revenue at S$6 billion. Despite this, the overall tax revenue accounted for 75.4% of the government’s operating revenue, contributing 10.7% to Singapore’s GDP.
IRAS highlighted its efforts to improve the tax filing process through digital initiatives, such as the launch of a chatbot to assist taxpayers with queries, which led to a 12% increase in self-service digital transactions. Looking ahead, analysts predict that tax revenue will continue to improve, with Singapore’s competitive corporate tax structure expected to attract more multinational corporations and foreign investment.
Moreover, Singapore may gain a new source of tax revenue in 2024 with the potential introduction of a tax on gains from the sale of foreign assets. This change is aimed at aligning Singapore’s tax regime with European Union standards to avoid being greylisted, a move driven by the increasingly multilateral tax policymaking environment.
