A Personal Finance Blog for Malaysian: Income tax - Malaysia vs Singapore

Friday, October 15, 2010

Income tax - Malaysia vs Singapore

Earlier I noted from The Star that Singapore individual income tax rate is lower than Malaysia by 6% (for top marginal rate). But how much does that really means? (http://askchong.com/2010/10/dont-just-compare-top-marginal-tax-rate.html)

Assumed a person can earn same amount of RM or SGD in both countries

A) If I can earn taxable income [also known as Chargeable Income (CI)] of RM50,000 or SDG50,000

In Malaysia - Tax payable is RM3,325 (effectively 6.65%)
In Singapore - Tax payable is SGD1,750 (effectively 3.5%)

Wow, we pay almost double in Malaysia.

B) If I can earn CI of RM80,000 or SGD80,000

In Malaysia - Tax payable is RM9,525 (effectively 11.9%)
In Singapore - Tax payable is SGD4,300 (effective 5.375%)

Wow, I am paying more than double the income tax if I earn in Malaysia.

C) If I can earn CI of RM150,000 or SGD150,000

In Malaysia, tax payable is RM27,325 (effectively 18.22%)
In Singapore, tax payable is SGD14,100 (effectively 9.4%)

Wow, again almost double for Malaysia income tax.

No wonder many "talents" go to Singapore to earn, not only the purchasing power but also the dollar value, living condition, political environment and also the tax effect.

Source of the following table: http://www.iras.gov.sg/irasHome/page04.aspx?id=1190