Rich people are now an increasingly important part of Singapore’s wealth ecosystem, but a new report has highlighted the extent to which the country has not yet taken advantage of the global trend.
The report from Wealth and Power, an independent research and consultancy firm based in Singapore, found that the number of wealthy individuals in Singapore had not increased in 10 years, while the number among the bottom 20 per cent had declined from 14 per cent to 13 per cent.
“The number of Singaporeans in the top 1 per cent of the wealth distribution has actually increased from 4.8 per cent in 2015 to 6.2 per cent last year,” said the report’s author, Karyn Lee, who is also the director of Wealth & Power.
“The bottom 20 percent has dropped from 6.7 per cent at the same time as the number in the 1 percent has increased by about 6 per cent,” she said.
Lee said that while there was a “shift in focus” from the top 10 per cent, the number on the bottom 10 percent had remained stable.
“There has been no increase in wealth for the bottom 1 per% in the last decade, as they have not invested at all in the sector,” she added.
The report comes as the country moves closer to the deadline of $10bn in tax revenues from a global tax treaty to be signed in 2018.
The agreement is expected to allow companies to deduct up to 50 per cent from their profits in Singapore.
Under the agreement, Singapore will also be allowed to reduce taxes by as much as 5 per cent on its top earners, who will be allowed a deduction of about $1.5bn a year.
There are a range of tax treaties that Singapore is negotiating with other countries.
One of them is the Trans-Pacific Partnership, which would give the government greater powers to negotiate trade deals, and would also include a provision allowing multinationals to deduct certain costs they incur from their Singapore income tax.
Singapore has also signed up to the Asian Infrastructure Investment Bank (AIIB), a regional development bank that was established in the 1980s and was the first Asian central bank to set up its own financial centre in Singapore and have a presence in Hong Kong and Macau.
But while the government has been pushing for more business investment, Lee said the country still lags behind the rest of the region in terms of tax compliance.
It is estimated that about 1.5 million companies in Singapore were not paying their taxes in 2017, and the Government is still grappling with the issue, she added, adding that many companies have not reported their tax liability for several years.
Lee said she hoped the report would lead to better tax compliance, which is currently the responsibility of the Ministry of Finance.
A total of $1,100bn is estimated to have been raised by the tax treaty between Singapore and Australia, and there are about 3,500 tax advisers working in Singapore to help companies comply with the tax laws.