Singapore to raise income tax for top earners

Singapore will raise the personal income tax rates for its top earners from 2016, with the top marginal rate up 2 percentage points to 22 percent, in order to meet the needs of surging government expenditure.

The city-state's Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam delivered the budget speech for the fiscal year 2015 (FY2015) on Monday.

He said the raise will affect the top 5 percent of the country' s income earners, which earns over 160,000 Singapore dollars (117, 647 U.S. dollars) every year.

A top income earner with income of 1.5 million Singapore dollars (1.1 million U.S. dollars) will see his effective tax rate increase from 17.9 percent to 19.5 percent, which leads to an increase in tax of about 25,000 Singapore dollars (18,382 U.S. dollars), the budget explained.

The new regulation will apply starting with income earned in 2016, and on taxes to be paid in 2017.

Under the new framework, the change to the top personal income tax rates is expected to raise additional revenue of 400 million Singapore dollars (294 million U.S. dollars) a year when it comes into effect.

Shanmugaratnam said the new regulation would to some extent affect Singpaore's competitiveness, but the country's tax regime is still designed to have lower overall taxes than most countries.

"We must remain an attractive place for world-class teams to be in Singapore with Singaporeans at the core, and to keep our place in the world. This will keep our economy vibrant, and retain talent, so that all can contribute towards building a better Singapore."