Comparison between Malaysia Income Tax and Singapore Income Tax 2 --- Tax Relief

It is quite different in term of the catagories on Tax Relief (which means what we can deduct from our income to reduce the chargeable income) between Malaysia and Singapore tax structure.

I shall separate the tax relief into three categories, i.e. Normal Care Taking Expenses , Consumption Expenses and Retirement Schemes.

Table 1: Normal Care Taking Expenses Tax Relief

From Table 1, we can observed that Singapore really trying to encourage female to increase birthrate, so many tax relief for working mother. One thing to note, not that Malaysia government does not encourage "citizen" to increase population by giving tax relief, just that majority of the female "citizens" are not working but just staying home to take care of babiesssss.....

The Singapore government also encourage caring society by giving tax relief to employee who taking care of their elders and siblings, this in a way reduce the responsibility of the government and sharing this saving with the working tax payers...

But I feel the individual tax relief of SGD1,000 is too little for working tax payers...as you are taking care of so many people in order to get the tax relief but why not anything for yourself? (Especially new foreign worker like me where my parents and family are still in Malaysia, nothing to relief...) On the other hand, Malaysia is giving RM9,000 as the individual tax relief, mostly to help the low income "citizen", but ok also, as we enjoy it as well...

Table 2: Consumption Expenses Tax Relief

As in Table 2, we can clearly see that Malaysia government really encourage all the tax payer to spend, buy house, books, sport, computer, broadband, health screening, etc...it is to make sure we have a balance lifestyle...haha.......Singapore is still the same objective to encourage birth and mother to return to work force...

Table 3: Retirement Scheme Tax Relief

Lastly, Table 3 shows that Singapore is more encourage tax payer to save for our golden days...As Malaysia is still going to increase the "nation" average income, so tax gao gao the higher earning middle class......who is the majority of the tax contributor...encouraging talent to move on...

Please note foreign worker like me can signed on with the SRS (Supllementary Retirement Scheme) to enjoy certain tax relief as I still do not contribute to CPF, and the SRS tax relief is more SGD26,775.


(to be continued....)

Comparison between Malaysia Income Tax and Singapore Income Tax 1 --- Tax Rate

It is the period of time for both Malaysia and Singapore governments to collect their revenue......It is time to pay our tax...

This is my first year paying tax in Singapore. Before I accepted my current job, I roughly have the information that Singapore has a lower tax rate compared to Malaysia, it was part of my consideration when I agreed to accept the offer of a lower pay (dollar-to-dollar) in Singapore.

Now, since it is the time for me to declare my income for year 2010, (please note that in Singapore, we consider it as YA 2011, as we are paying tax in 2011) I am think of sharing some comparisons and thoughts between the two income tax system.

Firstly is the tax rate:

Malaysia Income Tax Rate Assessment Year 2010

Singapore Income Tax Rate Assessment Year 2011 (Income of 2010)

As you can see above (please note the unit is RM and SGD respectively without conversion), Singapore obviously has a lower tax rate. Singapore's employees only start to pay tax when our annual chargeable income is above SGD20,000. But in Malaysia, the minimum annual chargeable income that shall incurr tax is RM2,500 (I still remember when I first started to work in Malaysia, my colleagues and I misinterpret that it was monthly income...).

The tax bracket in Singapore also is bigger. Singapore annual chargeable income range is bigger for each tax bracket. Thus, it really helpful for the lower or medium income range employees as we can enjoy the lower tax rate for a longer period (based on yearly increament). In Malaysia, the increament of tax rate is also higher, thus, as a tax payer you shall feel a lot of different when your income upgraded to another tax bracket.It seems like your increment becomes nothing or little if it just make your taxable income to the next tax bracket......Singapore's tax rate increases between tax brackets is not as severe.

Lastly, the maximum tax rate for Singapore employees is much lower as compared with Malaysia's, i.e. 20% versus 26% (I remembered previously in Malaysia, it 27% to 28%).

It is understandable that Singapore is a country with limited natural resources, their strength is in their people. It is important to attract talent from all over the world to work and contribute to the country's GDP. Hence, the income tax rate is much lower, in fact Singapore is the second lowest tax country after Hong Kong in Asia.

Another thing to notes is that Singapore has 7% GST (Good Service Tax) to contribute to the government income. In a way, this is to tax the more wealthy people as the more you buy the more you pay your GST. Malaysia is still in the debate of introducing the 4% GST, but if I not mistaken the Government Service Tax has increased from 5% to 6% (I noticed when I dined in one of the McD in Malaysia).

(to be continued...on Tax Relief and Rebate)

Singapore Bank Application 2

After having a banking account for your monthly salary deposit, with limited amount of cash or saving in hand, there is very limited investment tools for you to choose in Singapore.

You still need to send back some money to Malaysia for your family, your house instalments, your insurance, your unit trust top up, etc. Thus, in your initial month in Singapore, you have left with limited amount of net cash for investment. Nevertheless, we still need to have saving ourselves. By the way, there is no CPF, EPF for non-Singaporean, for us when we started work without PR. We must have discipline ourselves to save for our golden age.

With this limited amount of net cash flow, I choose to go back to basic...Saving in Bank. In Singapore, there are bank with special deposit scheme where you can earn higher interest rate by making monthly regular deposit. I have made comparison as below:



As a result, I choose to deposit in CIMB StarSaver. I noticed that banks originated from Malaysia are normally giving a higher interest rate. Just that the number of branch in Singapore is not many. For example, CIMB bank just has two branch in Singapore. But I felt that this type of saving is for long term and no withdrawal, so I made a deposit in CIMB Raffles Place branch.

And by using GIRO interbank fund transfer, I can transfer extra deposit of SGD500 per month to enjoy the 0.8% pa or if I am short for that month I still can enjoy 0.5% pa interest. I think this is the best rate I found in Singapore so far.