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Sunday, March 20, 2011

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.....notworthy.gif

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 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, 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...cry.gif...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....)


  1. Bravo! I came to the right place to dig as many information as possible about working in Singapore. I would like to ask if it would be difficult for a company in Singapore to apply an employment pass for a Malaysian? I have already gotten an offer letter from them but that is subjected to the approval of my EP. Please enlighten me.

    Also, I thought it would be interesting if you can blog about food places in Singapore. You know lah, eating is our favourite past time. Just my two cents.

  2. Anonymous:

    Hi! Congratulation for your offer. I think should be no problem with your qualification and salary range, especially for Malaysian. As we are very easy to adapt to Singapore culture.

    I shall take note on the food places information sharing...Haha...(^o^)

  3. Adam...this is another good post! (^^)b

  4. Looks like the self relief in S'pore is very low,
    more priority for wife and children,
    will be bad for bachelors.

  5. Eisse J:

    thomas: is how Singapore government model their tax structure, in order to attract female (mother) to come back to the work force...^^

  6. The Supllementary Retirement Scheme doesnt give the person a tax relief SGD26,775 if he or she decided to plant that amount per annum in that scheme. It merely deduct the money away from his/her total taxable income thus putting that person's tax bracket at a lower range. The interest rate is extremely low for that scheme which amounts to 0.25% pa currently. In a long run, putting the money in a safe deposit back in Malaysia with a minimum interest rate of 3% makes more sense.

  7. I agreed with you that it is not easy to determine the real benefits of SRS, as there is a withdrawal penalty when we withdraw the SRS fund before age sixty two (62), the current retirement age of Singapore.

    If we withdraw after retirement age, we only be taxed on 50% of the SRS fund amount.

    The interest rate of the SRS is not high as mentioned. But it do reduce the total taxable income (meaning Tax Relief), hence lower tax bracket.

    As a result, things to consider before taking up this scheme:
    1. What is the current year tax saving if reduce in term of tax bracket?
    2. When you plan to withdraw the money?
    3. What is our opportunity cost of this money?
    4. What your thinking of Singapore goverment policy when you reach retirement age?

    Luckily, this is voluntary scheme for increase your retirement fund. No need to continue if you do not plan to contribute on the assessment year. It is just another way to reduce your tax.

  8. Thanks for sharing =)

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