Income Tax Rate of Employment Pass Holders
Ministry of FinanceSpeakers
Summary
This question concerns a proposal by Mr Gan Thiam Poh to raise the income tax rate for Employment Pass holders to fund rising social costs. Minister for Finance Heng Swee Keat responded that the tax system must remain fair and competitive, noting that international treaties prohibit tax discrimination based on nationality. He explained that Employment Pass holders already pay progressive taxes and that tax reliefs are used to support specific social objectives like National Service. Minister for Finance Heng Swee Keat further stated that collected revenues are primarily used to benefit Singaporeans through various subsidies and privileges. These benefits in areas such as education, healthcare, and housing are reserved for citizens and are not available to Employment Pass holders.
Transcript
6 Mr Gan Thiam Poh asked the Minister for Finance whether the Government will consider raising the income tax rate of employment pass holders to provide additional tax revenue to meet the rising social cost.
Mr Heng Swee Keat: We need to raise revenue to finance our rising spending needs. But we have to do so in a way that ensures our tax system remains fair and internationally competitive.
Employment Pass holders make economic contributions to Singapore and pay taxes like Singaporeans. Under our progressive income tax system, those who earn more (including Employment Pass holders) already pay a higher proportion of their income in taxes.
Furthermore, under our tax treaties, we are required to not discriminate on the basis of nationality in our income tax treatment. This is in line with the international norms in both the OECD and the United Nations standards for tax treaty provisions.
While our income tax treatment does not discriminate on the basis of nationality, our tax reliefs do support various social and economic objectives, especially for those who make Singapore their home. For example, all eligible operationally ready National Servicemen (NSmen) are entitled to NSman tax relief, to recognise their contributions to National Service; and their wives and parents are also granted tax reliefs to recognise the support they give to their husbands and sons.
In addition, the revenues we collect are used to benefit mainly Singaporeans. This is why citizens enjoy a range of subsidies and privileges, in areas like education, healthcare and housing, which are not available to Employment Pass holders.