# Singapore Introduces (Mild) Citizenship-Based Taxation from November 1, 2015



## BBCWatcher

Add Singapore to the list of countries with (mild) citizenship-based taxation -- and this taxation also applies to those with permanent residence in Singapore.

On November 1, 2015, Singapore introduced MediShield Life. This is a basic health insurance program that provides coverage exclusively within Singapore. If you are a citizen or permanent resident, _no matter where you live in the world_, participation is compulsory. Premium payments are fixed by age, but there is a sliding scale of subsidies available (including for overseas Singaporeans/Singaporean PRs) for lower income individuals. In other words, it operates as a income tax with a cap, much like many social insurance payroll tax systems. There is a higher premium for a period of time if you have a serious pre-existing condition. There are penalties for late payment and failure to pay.

If you don't want to pay this tax, no problem: you can terminate your Singaporean citizenship or permanent residence. Along with that termination you lose the ability to live and work (and have your medical services covered) in Singapore, of course. Acquisition of a foreign citizenship is an expatriating act for Singapore citizens and results in automatic loss of Singaporean citizenship once known/documented.

Unfortunately your MediShield Life premiums would not _ordinarily_ qualify as taxes that could be credited within a foreign tax system, although they might qualify in certain tax systems as health insurance premiums.

A "typical" family of three (two adults, one child) with no subsidies would currently pay about S$1,000 per year in MediShield Life premiums or taxes, as you prefer to call them. There is no waiver no matter what other insurance you may have, private or public.


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## BBCWatcher

I should also add that it is possible to pay this premium/tax from "Medisave," a subaccount within Singapore's social security system. However, you only get Medisave dollars if you and your (Singapore-based) employer pay them, i.e. when you have earned income in Singapore. If you live overseas that doesn't happen. Singapore has no social security treaties at this point in time.

Permanent residents, as you might expect, have minimum Singapore residency requirements to meet in order to preserve the option to reenter Singapore (called a reentry permit). However, if a PR gets back into Singapore before expiration of the permit (normally a 5 year permit), there's no requirement to renew the permit. A valid permit is only required to reenter Singapore. In principle a PR can have overseas residence and maintain PR status for up to 4.9 years or so.

Anyway, there you go: another (mild) citizenship/PR-based tax. It's real money, compulsory, and invariant with residence. Welcome, Singapore.


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## iota2014

> If you don't want to pay this tax, no problem: you can terminate your Singaporean citizenship or permanent residence. Along with that termination you lose the ability to live and work (and have your medical services covered) in Singapore, of course. Acquisition of a foreign citizenship is an expatriating act for Singapore citizens and results in automatic loss of Singaporean citizenship once known/documented.


Sounds reasonable. I wish - in vain, I know - that America would offer this.


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## BBCWatcher

iota2014 said:


> Sounds reasonable.


....Until you consider a couple "finer points." 

So here's one problem with loss of citizenship or permanent residence in Singapore. As background, a bit over 80% of Singapore's citizens live in public housing built by the Housing Development Board (HDB). The vast bulk of this housing stock is purchased, not rented. Citizens can purchase new HDB units, and lower/moderate income citizens can receive hefty purchase subsidies. Even wealthy citizens can use some of their national pension dollars to support their purchases if they wish. Each adult citizen is entitled to buy up to one HDB unit, so it's not uncommon for a whole family to own a collection of units and to rent out a couple. (PRs can purchase only resale units and without subsidies. Foreigners cannot purchase HDB units at all.) HDB units come with some covenants including:

1. They are all 99 year leaseholds. After 99 years units revert back to the government without payment. HDB started in the 1950s (with very few units), so none of the units have reached their 99 year limits yet, but they all have them.

2. You have some ability to rent them out to foreigners and PRs, but those rental rights are restricted, and the restrictions can and have been tightened over time. To net it out, you must live in your own unit for at least some percentage of the time you own it.

3. You have various limitations on physical remodeling and furnishing, notably that you cannot alter the overall size/shape of the "wet area" (bathroom, shower, etc.)

4. (And here's the big one.) If your citizenship or PR status ends, you must immediately dispose of your HDB unit(s). Yes, that's right: you have a forced sale, and you don't get to time the sale separately. In at least some cases you need to pay back any subsidies you've received, too.

Much the same is true with "landed properties," meaning detached homes with their own land. Land in Singapore is precious, and the government has a few special rules about landed properties. One big rule is that foreigners (and PRs for that matter) need special permission to buy landed properties, rarely granted. If you lose your citizenship, you must immediately sell your landed property if you have one. If the real estate market is not a seller's market, that's your problem.

On top of that, if stamp duty (real estate transaction tax) is owed on the sale -- and I think it is -- since you're a (new) foreigner you pay the highest stamp duty rate.

That's not how it works with the United States. There's no forced real estate sale with a change of national status. Foreigners can buy and own basically any U.S. properties they want, and they do. They don't pay higher real estate taxes either.

You just knew there had to be a catch, right? Well, there is, at least one. 

Here's another potential problem. If your citizenship or PR status ends, and the government thinks that happened at least partly to avoid compulsory military service for you and/or your sons, there can be some negative consequences. Notably it might not be wise to step foot in Singapore, even to transit at the airport without clearing immigration. The government has been known to "grab" males who haven't served, even if they're just connecting to another flight at the airport.


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## iota2014

Sorry, you've lost me. It does seem perfectly reasonable that a small country like Singapore has rules to prevent housing and property being bought up by wealthy investors from other countries. What's it got to do with the medical insurance premium?


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## maz57

BBCWatcher said:


> If you don't want to pay this tax, no problem: you can terminate your Singaporean citizenship or permanent residence. Along with that termination you lose the ability to live and work (and have your medical services covered) in Singapore, of course. Acquisition of a foreign citizenship is an expatriating act for Singapore citizens and results in automatic loss of Singaporean citizenship once known/documented.


At least terminating Singaporean citizenship (along with its privileges and obligations) appears to be cheap and easy for those who wish to move away permanently. Can it be done by mail/online?


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## iota2014

maz57 said:


> At least terminating Singaporean citizenship (along with its privileges and obligations) appears to be cheap and easy for those who wish to move away permanently. Can it be done by mail/online?


Apparently yes.

http://www.mfa.gov.sg/content/dam/m...n - Renunciation of Singapore Citizenship.pdf

$27!


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## BBCWatcher

I wouldn't describe a forced property sale on strict deadline with repayment of any subsidies as either "cheap" or "easy" -- not the first words that come to mind. And it's the whole process that counts, not any individual step in the process.


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## iota2014

It seems both countries, US and Singapore, want to make sure that citizens/Permanent Residents who expatriate do not just try to shed the obligations of citizenship while retaining some of the rights and privileges. But they define the obligations, rights and privileges differently. 

Singaporean rights and privileges (correct me if I'm wrong) include right to reside, right to consularassistance when abroad, right to a range of benefits, subsidies, etc, including the right to invest in the national housing stock on very favourable terms. The obligations include taxation (including national health insurance), and gender-based military service. Expatriation is quick, cheap, and easy, as long as you leave the country and don't try to hang on to any of the privileges of citizenship.

US has several definitions of citizenship and the rights, privileges, and obligations vary with each type. Citizens, natural-born citizens, naturalized citizens, and Permanent Residents have right to reside and access to favourable rates of taxation. Citizens, natural-born citizens, and naturalized citizens have right to consular assistance when abroad. Natural-born-citizens can run for President. Citizens, tax citizens, natural-born-citizens, naturalized citizens, former citizens possessing wealth, Permanent Residents, and former Permanent Residents possessing wealth, are all liable for taxation regardless of residence or source of income. Expatriation is more than a hundred times as expensive, and far more difficult and complicated, than it is for Singapore, being a two- or three-stage process in which one progresses slowly and uncertainly from citizenship to tax citizenship to (if deemed wealthy and/or recalcitrant) covered expatriate, or (if sufficiently rich or sufficiently poor) expatriate.

All that being said, forced military service is a very nasty obligation. I would certainly sell the housing investment and expatriate, if I were Singaporean


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## BBCWatcher

iota2014 said:


> All that being said, forced military service is a very nasty obligation.


I'm reminded of Jack Benny's very old but still very funny line:

Robber: "Your money or your life!"
Robber: "I said, YOUR MONEY OR YOUR LIFE!"
Benny: "I'm thinking it over!"


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## iota2014

BBCWatcher said:


> I'm reminded of Jack Benny's very old but still very funny line:
> 
> Robber: "Your money or your life!"
> Robber: "I said, YOUR MONEY OR YOUR LIFE!"
> Benny: "I'm thinking it over!"


Ha ha, yes, I remember that one.


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## BBCWatcher

Despite some objections among Singaporeans living overseas, Singapore's government is holding firm. The government will continue to deduct MediShield Life premiums for all Singaporean citizens and permanent residents no matter where they are resident but with the same subsidies and waivers on offer for low income households. The Ministry of Health has confirmed that they are fully aware of the "backstop" nature of MediShield Life, that Singaporeans/PRs can enter Singapore any time they wish for medical treatment and that the program is lifecycle in nature. According to that logic (which is logical, for better or worse), the premiums cannot and will not be waived. The government is also refusing to waive participation for those who have private medical insurance since MediShield Life is intended to be universal and foundational. Private medical insurance is available (and indeed recommended) to "top up" MediShield Life. Whether or not an individual's private medical insurance duplicates MediShield Life benefits, the government insists on all citizens and PRs having MediShield Life coverage.

Singapore does not currently have any social insurance treaties with other countries. Such treaties might hypothetically provide reciprocal medical coverage.

Welcome to the "club," Singapore!


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## iota2014

> The government will continue to deduct MediShield Life premiums for all Singaporean citizens and permanent residents no matter where they are resident but with the same subsidies and waivers on offer for low income households.


Out of interest, how will Singapore go about collecting the premium from expats?


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## BBCWatcher

The government deducts premiums from Medisave accounts first. If/when there's no more Medisave money, the government sends a bill -- with all the usual collection and enforcement mechanisms.


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## Bevdeforges

BBCWatcher said:


> The government deducts premiums from Medisave accounts first. If/when there's no more Medisave money, the government sends a bill -- with all the usual collection and enforcement mechanisms.


Which are generally pretty weak or inefficient on the international level. Probably most at risk will be accounts left behind in Singapore.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Which are generally pretty weak or inefficient on the international level. Probably most at risk will be accounts left behind in Singapore.


The inherent fly in the CBT ointment


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## maz57

Sounds like another country I don't want to be a citizen of. 

Jeeze, even a lowly backwater like Canada doesn't force people to buy medical insurance, although they'd be stupid to not buy it because its a very good deal. If a Canadian moves elsewhere and makes other arrangements then that's the end of it, no more paying for Canadian coverage. (Because, guess what, its a service you don't/can't use because you are no longer a Canadian resident.)

Another fly in the CBT ointment--forcing people to pay for services they can't possibly use.


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## BBCWatcher

Bevdeforges said:


> Which are generally pretty weak or inefficient on the international level.


No, I disagree, at least in this case. The Singaporean government still controls renewal of its passports, and PR status is lost after enough time spent outside Singapore even for those who are tax compliant. Singapore does not tolerate multiple citizenships anyway, so if one of their citizens acquires another citizenship that alone triggers automatic loss of Singaporean citizenship.

If you don't pay the tax (assuming you don't qualify for a subsidy or waiver based on low income) then pretty quickly you're going to lose either PR status or (at least effectively) your citizenship. Which also means you aren't going to be able to return to Singapore for medical care, which is rather the point.

There's also the fact that this is a single party democratic parliamentary government that routinely canes graffitists. (The government of Hong Kong recently cooperated in an extradition request for a Westerner who sprayed graffiti on some train cars in Singapore. International extradition for graffiti!) Singaporeans tend to follow the rules. 

The government holds all the cards here. Either you pay your tax or you're probably not going to be returning to Singapore for the medical care that tax supports (or for any other reason, including transit). It's going to be just that simple. My supposition is that the government really would rather not have "loosely attached" citizens and (especially) PRs anyway, so if (when) they lose a few for this reason that's a policy feature, not a bug. There's no shortage of demand for Singaporean PR and citizenship.


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## iota2014

Come on, Singapore, socks up, please, you're just not trying. That's not proper CBT - letting them renounce for free? No exit tax, and not even a fee? The only sanction for not paying is not to be able to use the services they're being charged for? Singapore, for crying out loud, that is the whole point of CBT - the expats *pay* for the services but *they can't use them*.


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## BBCWatcher

No, this really is a tax with all that implies. Singapore's public hospitals and clinics are still going to take care of Singaporeans who show up on their doorsteps with medical needs even if they haven't paid their MediShield Life premiums or their other taxes. (Tax revenues are fungible, after all. The government itself will tell you that MediShield Life premiums are designed to exceed actual medical costs the government incurs -- that's part of the design, freely acknowledged.) Of course the Singaporean government has a few more ways to collect the taxes owed and/or to impose criminal penalties if you're physically in Singapore.

It really is CBT -- with citizenship/residency-based compulsory military service, which Singapore also has. As with RBT there's nothing wrong with it if democratically decided and reviewable. That "club" and its members set their own rules. If you don't like that club and its rules then you can find another.

I would also point out that Singapore's CBT is, on balance, more regressive than the CBT the U.S. has. Subsidies and waivers aren't available unless you have rather low income. Singapore has started to tax a lot more than 6% of its overseas citizens and permanent residents. There's no Foreign Tax Credit available to apply against this tax either.


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## iota2014

> It really is CBT -- with citizenship/residency-based compulsory military service, which Singapore also has. As with RBT there's nothing wrong with it if democratically decided and reviewable. That "club" and its members set their own rules. *If you don't like that club and its rules then you can find another.*


That's why the Singaporean medical insurance tax is not comparable to US CBT. If you don't like the US CBT club rules, it's not easy to leave.

The other reason the Singaporean model is not comparable to the US model is that Singapore would not get far if it tried to outsource the extraterritorial collection of its medical insurance premiums to the world's banks, on pain of crippling withholding "penalties".


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## BBCWatcher

iota2014 said:


> If you don't like the US CBT club rules, it's not easy to leave.


Of course it's easy! U.S. embassies and consulates accept credit and debit cards.

Did you think the Singaporean government accepts a mere financial payment in lieu of the compulsory military service a citizen or permanent resident is trying to avoid? Sorry, no.


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## iota2014

Nope, far from easy. I know you know that, so I'll resist the bait. 

Compulsory military service is a big incentive to leave, I don't doubt. But the point is, you *can* leave, and apparently, in the case of Singapore, it really is easy.


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## Bevdeforges

BBCWatcher said:


> Of course it's easy! U.S. embassies and consulates accept credit and debit cards.


Hm, perhaps you need to explain this to a few of the consulates here in Europe. It isn't the case everywhere.
Cheers,
Bev


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## Nononymous

Apropos: Delays, costs mount for Canadians renouncing U.S. citizenship - The Globe and Mail


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## maz57

BBCWatcher said:


> Of course it's easy! U.S. embassies and consulates accept credit and debit cards.


I can't speak for other countries, but what the US consulates in Canada don't offer is timely appointments to renounce. Toronto is booking for Dec 2016 and the last time I checked Vancouver can't even tell you when an appointment might be available. What payment options might be acceptable is a moot point.

Besides, renouncing merely sheds the US citizenship; it doesn't get you clear of the IRS. It is only the first step in a long, painful journey.

Of course a small country like Singapore can't expect to compete with their version of CBT. The US has been at this for a very long time.


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## Pacifica

Yes, it’s anything but easy to get a renunciation appointment here. 

As of last month, January, Calgary was booking for November, pretty much the same as Toronto’s current 10 month wait. Sometimes a consulate here will not even make a booking, but instruct the person to write again several months later in hopes of getting an appointment booked at that time (no guarantee) and the appointment will take place months after that. This practice has occurred with Ottawa and Vancouver.

I started tracking Toronto pretty closely in 2011. Wait time was around 2 weeks there in late 2011. Over the next 2-1/2 years it increased slowly and steadily to around 2 months and then it just started skyrocketing . . .


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## maz57

Yes, the number of CLNs would be very much larger if the US government didn't purposely constrict the pipeline. 

In my mind this constitutes a "reasonable explanation" as to why one is unable to produce a CLN if/when one is FATCAed by their bank, never mind the outrageous fee. (Now more than $3300 CDN.) Truly disgusting.


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