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Saturday, April 16, 2011

Comparison between Malaysia Income Tax and Singapore Income Tax 6 --- Numerical Comparison

After posted several posts on tax comparison between Malaysia and Singapore for year 2011 from several angles, i.e. Tax Rate, Tax Reliefs, Tax Rebate, Tax Filing, and Tax Payment, it is good that I post a numerical comparison to show a better picture.

I shall perform a comparison for salary range from 2,500 per month to 25,000 per month (RM/SGD). To be fair, it shall be a dollar-to-dollar comparison without currency conversion. I shall assume a 2 months bonus payout from each year.

On Tax Relief, Malaysia's Tax Resident shall enjoy more for lower income group, where Personal Relief of RM9,000, Broadband relief of RM500, assumption for book purchase of RM150. On the EPF and Life Insurance, I assumed 11% and 10% (of annual income) respectively with a cap of RM6,000. Lastly, I assume of a Medical Insurance of 5% (of annual income) with a cap of RM3,000.

As for Singapore Tax Residents, the Tax Relief catagories are limited, i.e. Personal Relief of SGD1,000, month income's  CPF of 20% with a cap of SGD54,000 and bonus's CPF of 20% with a cap of SGD22,500. Life insurance is not considered as the cap is only SGD5,000 if no zero CPF contribution.

As a comparison, Malaysia has a higher tax relief for lower/middle income group but Singapore is comparable when the income gets higher.

In term of Tax Rebate, Malaysia has only tax rebate of RM400 for taxable income lower than RM35,000 per annum. In Singapore, for year 2011, the tax rebate is 20% of the tax amount with a cap of SGD2,000. For both countries, I assume the tax payer has no zakat contribution and other rebates (Singapore has further Parenthood Tax Rebate).

With all the above assumptions, I found the below table:

Malaysia has a lower income tax for monthly income lower than 4,000 per month. (But please note that Malaysia starts to pay tax with annual taxable income more than RM2,500, in Singapore it only starts to pay tax when annual taxable income more than SGD 20,000).

For monthly income more than 4,000, the tax amount in Singapore is lower, and the magniture increases as the income increases. It is obviously because the effective tax rate is about half of Malaysia. This is just my rough comparison, feel free to comment and discuss.

(Latest news informed that Malaysia Government plans to give fix tax rate of 15% for 5 years to Malaysian Talent that have been working abroad to come back to serve the Nation)

P/S: This shall be my last post on this topic this year, remember to file your tax (for Malaysian), as deadline is near. Singapore has done with it yesterday (15th April).


  1. Nice post. I have a question. Can anyone that earns salary in Singapore claim Earned income relief ? or is it not that straight forward?

    By the way, which engineering line are you in?

  2. Anonymous:

    Thanks for your comment.

    Yes, all the tax resident can claim Earned Income Relief, it is straight forward from my understanding:
    -$1,000 (if you are below 55)
    -$3,000 (55 to 59)
    -$4,000(60 and above)

    I am from Electrical Engineering. You?

  3. Ok, similar to Malaysians RM 9,000 pa relief I believe.

    I did mechanical engineering.

  4. Anonymous:

    Yes, you are right. It is the same but much lesser...=p

  5. Hi Adam,

    Just wanted to say thanks for this series of income tax comparison between Singapore and Malaysia. Good work!

  6. Thanks for your comment...(^o^)

    Have been busy for the past few weeks...shall update soon...=p

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