Singapore tax system FTW
[Editorial note: I’ll be travelling for most of the next 4 weeks, so posts will likely be spotty or non-existent]
In this edition
Stuff you might like
Singapore tax system FTW [lightly-edited repost from LinkedIn]
Stuff you might like
When I read this NYT story about how teenaged boys are creating deepfake AI nudes of teenaged girls (paywall unlocked), my first three thoughts were this is already happening, or will soon start to happen, in Singapore; my friends’ daughters are going to be at risk; and I’m glad I’m not a parent. Long read, but very worth your while.
When you sell your company, the last thing you’d expect is for the buyer to invoice you (for USD77M) post-closing and ask you (the seller) to pay them (the buyer). Yet that’s exactly what happened when a family sold their supermarket business Save Mart to a mid-market private equity fund called Kingswood. The seller’s accounting treatment of some debt, when read with the M&A documentation, created a loophole that allowed the fund to claim this — the fund won at arbitration, and won again in a court, and it’s now pending further appeal. Mind blowing stuff.
This NYT story about Nepalese farmers supplying the raw materials for Japanese cash notes (paywall unlocked) is a “feel good” story about how problems in a developed market (climate change and shrinking population reducing Japan’s own production) led to something positive in a frontier market (poor Nepalese farmers about to give up getting a lifeline and now prospering).
Singapore tax system FTW
[lightly-edited repost from LinkedIn]
Today was the tax filing deadline in Singapore, also my annual reminder to appreciate the Singapore system. While nobody enjoys paying taxes, our system has some strengths that are worth celebrating.
Here are my top 5 favourite things about Singapore’s income tax system:
💸 Singapore’s top marginal tax rate is 22%. 22%!! You’ll appreciate this even more if you compare it globally.
📈 There are no capital gains tax. No capital gains!! This amplifies the power of compounding over time, and also greatly simplifies things by eliminating the need for complex strategies like loss harvesting.
😌 Income reporting is seamless for many (most?) people. Many employers directly report employment income to the taxman, thereby streamlining the reporting process. I appreciate this even more now that I’m self-employed and have to calculate it myself.
💰 Singapore does not withhold income tax. Instead, taxpayers pay in arrears, and can even pay over 12 monthly interest-free instalments! This means I just filed for my 2023 income, and will pay my taxes for 2023 in instalments over 2024-2025. It represents a “float” for taxpayers — not much, but still free money.
💻 The online filing process is really very smooth, with many fields pre-populated by the government. Easy peasy!
I recognize that my perspective comes from a place of privilege, and also that there is room for improvement. For example, the treatment of stock options in private companies (coupled with most Singapore startups’ typical-but-outdated approach of giving departing employees a very short period to exercise options) is actually quite harsh, impractical and myopic, and is particularly hard on foreigners facing exit tax requirements; it deeply undercuts the overall push and massive funding to grow a startup ecosystem here.
More generally, lower taxes correlates to reduced government and social support and services.
But there is still so much to like about Singapore’s system, especially when compared to other countries, and so I like it.