Singapore’s tax revenue surges 22.4% to S$60.7b on low year-ago base

SINGAPORE’S tax revenue rose by 22.4 per cent to S$60.7 billion in financial year 2021/22, on the back of a low base during the previous pandemic-hit year, according to the annual report of the Inland Revenue Authority of Singapore (Iras) on Thursday (Aug 11).

Tax collection in the previous financial year had fallen 7.3 per cent to S$49.6 billion, marking the first fall in more than 15 years. The latest FY’s recovery in revenue was seen across all tax types as the economy rebounded from Covid-19.

Khoon Goh, head of Asia research at ANZ, added that this year’s tax collection is still 13.5 per cent higher than in FY2019/20, “showing how strongly the economy has rebounded”.

Corporate income tax accounted for the largest share of collections at 30 per cent or S$18.2 billion, up 13 per cent from S$16.1 billion the previous financial year. This was followed by individual income tax at 23 per cent or S$14.2 billion, up 11.6 per cent from S$12.8 billion the year before.

The rise in corporate and personal income taxes reflected stronger earnings, as well as the deferment of tax payments in FY2020/21 to help businesses cope with the impact of Covid-19, said Iras.

Maybank economist Chua Hak Bin said: “More businesses have seen their revenue normalising and profitability recovering, especially for the laggard sectors – hospitality, aviation, retail and F&B – hard hit during the pandemic.”

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“We expect government revenue to exceed their earlier budget projections, providing some fiscal room for another support package before year end, without undermining the fiscal balance,” he said.

Of the overall S$11.1 billion increase in tax collection for FY 2021/22, the biggest increase of S$2.9 billion came from higher stamp duties, “due to the buoyant property market and an increase in property transactions”, said Iras. After falling for the past 4 years, stamp duty collections rose 73.6 per cent to S$6.8 billion in the latest FY. 

The second largest increase of S$2.3 billion was from goods and services tax (GST), “due to higher consumption as Covid-19 restrictions were eased and the economy rebounded”, said Iras. A total of S$12.6 billion in GST was collected.

The S$60.7 billion figure represents 73.6 per cent of government operating revenue and 11.4 per cent of Singapore’s gross domestic product.

The arrears rate for income tax, GST and property tax fell to 0.64 per cent, with S$332.8 million in arrears for the year, down from 0.72 per cent the previous financial year.

In FY2021/22, Iras also audited and investigated 8,665 cases and recovered S$385 million in taxes and penalties.

For the FY, it disbursed a total of S$8.2 billion in enterprise grants to support businesses, jobs and wage growth for Singaporeans during the pandemic, including S$3.1 billion in payouts to over 130,000 businesses under the Jobs Support Scheme.

Looking forward, ANZ’s Goh said: “Tax revenues in FY2022/23 will continue to increase thanks to strong corporate profits, rising wage growth and higher property tax and stamp duty. But the rate of growth will be more modest due to the higher base.”

“The FY2022/23 tax revenue will be given a late lift from the GST increase on Jan 1, 2023,” he added.