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Saturday, March 19, 2011

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...cry.gif...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...tongue.gif).

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...rclxub.gif...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)


  1. Interesting topic,comparison of tax structures,
    i remember asking someone to write about it.
    I heard from a friend working in Australia about their very high tax rate but i think that will come with better benefit.

  2. thomas:
    Thanks for your comments, please drop by again when I complete the other posts on the tax topic between Malaysia and Singapore.

  3. Hye there,

    i ve been planning to work at singapore but my concern about the salary deducted. is there any deducted made from the salary for malaysian woring there??
    thanks anyway. nice tax threat.

    1. Hullo

      I'm an 'old bird' having worked in KL and Singapore. if you like you can ask me at


  4. nyamuq,

    How long you have been working? If you just a fresher, it should be much better off...over here Singaporean fresh grad gets around SGD2.8k to SGD3k (depends on industry and your degree)...

    For an old bird, normally they would not pay you dollar to dollar...normally shall reduce...

    Thanks for your comments.

  5. This comment has been removed by the author.

  6. Hi choonhong,

    This is what the normal range that most of the company offers to fresh grad...if you are from a reputable university and with good grades...

  7. i went to Kelly. the guy said even fresh grad from NUS and NTU cannot get 2.8k. btw, do you have any chemical engineer related job to introduce?

  8. choonhong:
    I don have job to introduce to you yet...but from the news shown in TODAY, 15th September, the average salary for degree fresh grad in engineering is SGD2,745 and forecasted to be SGD2,829 in it is not bad...

  9. Not a shitty engineerNovember 1, 2011 at 1:46 AM

    For an engineer your math really sucks. These rates are marginal the % only increases on money made in addition to what was already earned that year. It's impossible for you to take home less money on higher salary.

  10. Shitty Engineer,

    I did not say that...please be more specific on which part I am wrong...

    1. I'm not the 'shitty engineer' fella and don't agree with the tone of their post but your blog was fairly poorly worded. You said:

      "For example, when your income increase from RM50,000 per annum to RM55,000 per annum, your tax rate increases to 19% (we must calculate the effective tax rate though). As a result, you might be getting a lower take home pay if your salary increament arrived you to the lower band of the next tax bracket..."

      I'm not sure what your trying to say, but the last line of the quoted part of your post seems to suggest as 'shitty engineer' says that you may earn less money despite a salary increase because you enter the next bracket. This is not possible in a progressive tax system with marginal rates (obviously it may occur if the tax rates change or if there is a flawed rebate or relief/welfare system or if the marginal tax rate is over 100% although I've never heard of such a thing). You will always earn more (except if the marginal tax rate at the bracked you enter is 100% i.e. a government imposed salary cap as some politicians in Europe have proposed). You may not earn as much extra as you would expect and your effective tax rate will increase, but you will still be earning more.

    2. Nil Einne,

      Thanks, now I understood my mistake. You are right in both your statement on the tone as well as your clarification.


  11. in malaysia, the 2.5k bracket is after you minus 9k for self and dependent and 6k(max) for EPF and any other entitled relief and rebate.

  12. Anonymous:

    Yes, you are right!

  13. I'm a Malaysian having worked both in KL and now in Singapore for 4 yrs and 12 years respectively, in Accounting profession.

    It will be interesting if you also include 7% gst into your comparison. e.g. one may spend 90% of his salary in SG so he incurs another 90% x annual salary x 7%. You will notice that he is still BETTER OFF in local currency terms compared to Tanah Airku.

    I did such comparison but could not locate it now...


  14. Anonymous,

    What you said are true, in Singapore we need to pay 7% GST on our purchases. And the "value" of SGD is still far better than RM in term of the buying power.

    Malaysia still has the service tax. It is chargable in most of the restaurants. It really supprises me when I buy a McD meal now in Malaysia, almost RM20....:p

    The few cheap things in Malaysia are petrol, electricity, water, gas, house, may be car in certain ways...

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