Income Tax Rate of Employment Pass Holders

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.

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 Organisation for Economic Co-operation and Development 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.