SINGAPORE — Singapore needs to introduce wealth taxes and is finding out the potential of making these with larger means pay extra, Finance Minister Lawrence Wong informed CNBC on Monday.

Nonetheless, the minister pointed to the challenges of such wealth taxes, which might inevitably trigger cash to circulation away from Singapore.

As a part of its 2022 funds, Singapore on Friday elevated taxes for greater earners, together with duties on actual property and motor automobiles, to make sure that those that earn more money pay extra.

Singapore, a wealth administration hub, is taking a look at a broad vary of wealth taxes “very carefully,” Wong mentioned. They embody taxes on capital beneficial properties, dividends and a internet wealth tax on people.

“However the problem with these kinds of wealth taxes is that wealth and monetary flows are extremely cellular. And if we have been to maneuver however different jurisdictions wouldn’t have related taxes, it is vitally straightforward for wealth to maneuver away from Singapore to a different location,” Wong informed CNBC’s Martin Soong.

Among the many adjustments introduced on Friday have been tax charge will increase for high earners that can have an effect on the highest 1.2% of taxpayers. It is anticipated to generate $170 million Singapore {dollars} in further tax income per 12 months, according to Singapore’s finance ministry.

On high of these issues, it may be a “very complicated train” to estimate wealth of people, Wong added.

He said during Friday’s budget speech that “ideally, we’d need to tax the online wealth of people. However such a tax isn’t straightforward to implement successfully.” He identified that different nations additionally face challenges doing so.

Germany, France and Denmark have stopped levying taxes on people’ internet wealth, with the variety of OECD nations that accomplish that dropping from 12 in 1990 to solely 3 in 2020, Wong mentioned Friday.

“So we proceed to review these choices. We do not rule something out in that sense,” he informed CNBC. “However I feel we additionally need to be sensible and that is why within the funds, we determined to impose … wealth taxes by way of … the present means, which suggests property and luxurious vehicles.”

Property taxes will probably be raised from between 10% to twenty% for non-owner-occupied properties, to 11% to 27% in 2023. In 2024, these will probably be additional elevated to 12% to 36%. Increased taxes can even be levied on luxurious vehicles.

At present, property taxes are Singapore’s “principal technique of taxing wealth,” Wong mentioned in his funds speech.

Nations within the Group for Financial Cooperation and Improvement agreed to a world minimum corporate tax rate of 15% in October final 12 months. The deal, which is able to kick in 2023, will “reallocate” $125 billion in income from 100 of the world’s largest firms to nations worldwide, the OECD mentioned.

“However we’ve by no means relied solely on taxes to compete for investments,” Wong informed CNBC. “What it means for [Singapore] is that we’ve to redouble our efforts to strengthen our non-tax aggressive elements.” That can embody the city-state’s infrastructure, the capabilities of its workforce and total strengthening its enterprise surroundings to be extra engaging, he mentioned.

“We’re decided to be sure that Singapore stays the most effective locations on the planet for enterprise,” Wong mentioned.