Your guide to doing business in Singapore
Singapore is a city-state in southeast Asia, situated at the southern tip of Malaysia. Established in the 19th century as a trading post, Singapore is now the 36th largest economy in the world, and was ranked 2nd in the World Bank’s 2017 Ease of Doing Business survey. The city plays a major role in global commerce, acting as a gateway to the wider APAC region and attracting significant amounts of foreign investment. Singapore hosts over 7,000 international businesses, offering them a favourable bureaucratic environment and corporate tax rates capped at 17%. Its major industries include financial services, manufacturing and a range of high technology products.
Singapore's growing economy is fertile ground for business - and provides a range of investment opportunities:
The Singapore Economic Development Board (EDB) attracts Investment Funds on a large-scale for Singapore despite the city's relatively high-cost operating environment. The stable and corruption free Government, highly skilled workforce and efficient infrastructure has attracted investments from thousands of global businesses from around the world.
The company is required to apply online for submission of CPF contribution details via CPF Auto-excel Plus (AX Plus) using the representative’s SingPass and entity’s Unique Entity Number (UEN). The application will take approximately 2-3 working days. Once the application is approved, the company will receive an Email and Welcome Letter containing the CPF Submission Number (CSN), Payment Advice (CPF91) and an Application for Interbank GIRO form. The company is required to quote the CSN when transacting with the CPF Board, e.g., paying CPF contributions or correspondence.
It is not mandatory to make payments to employees or the authorities from an in-country bank account in Singapore.
The working week in Singapore is Monday to Friday, generally an 8 hour day and 40 hour week. Some companies work a 5.5 day week, from Monday through to Saturday.
Singapore lies at the southern tip of continental Asia, and shares its northern border with Malaysia. While Singapore is a city-state, its territory actually consists of 63 islands, including Pulau Ujong, on which its main urban centre is located. Established by the East India Company in 1819, Singapore has grown from a trading post to an international business hub, home to thousands of international organisations. Operating as a parliamentary republic, Singapore is a stable and transparent democracy with low levels of corruption and a well-established judicial system. Highly urbanised, there are few untouched natural environments in Singapore, while its climate is hot and humid with tropical levels of rainfall.
General Information
Full Name: Republic of Singapore
Population: 5.46 million (CIA, 2013)
Official Languages: English, Mandarin, Malay, Tamil
Religions: Taoism, Buddhism, Islam, Christianity, Hinduism
Monetary Unit: 1 Singapore dollar = 100 cents
Main Exports: Computer equipment, machinery, rubber products, petroleum products
Internet Domain: .sg
International Dialing Code: +65
Hello Hello
Good Morning Selamat Pagi
Good Evening Selamat Petang
Do You Speak English? Adakah Anda Bertutur Dalam Bahasa Inggeris?
Good Bye Selamat Tinggal
Thank You Terima Kasih
See You Later Melihat Anda Kemudian
Dates are usually written in the day, month and year sequence. For example: 1 July 2015 or 1/7/15.
Numbers are written with a comma to denote thousands and a period to denote fractions. For example: SGD$ 3,000.50 (three thousand Singapore Dollars and fifty cents)
For corporations, the basis tax period is the Financial Year. Assuming the company’s Financial Year ends on 31st March, the YA 2015 will be based on the accounts for Financial Year ending 31st March, 2014 and the YA 2014 will be based on the accounts for the Financial Year ending on 31st March 2013.
Companies are not required to withhold salary for any employee via monthly estimated payroll tax deduction. All employees must file an annual tax declaration, and pay their liability directly to Singapore’s Inland Revenue Department.
The return process requires employers to prepare Form IR8A (along with appendix 8A and appendix 8B) or Form IR8S (where applicable) for employees who are employed in Singapore by the 1st of March. Businesses with more than 10 employees for an entire year (ending 31st December), or employers who have received the Notice to File Employment Income of Employees Electronically must submit employee income information electronically by the 1st of March following the assessment year.
Even though there is no income tax withholding at source, companies must withhold salary and seek tax clearance by filing Form IR21 for at least 1 month for foreign employees - under the following circumstances:
Companies may be liable for a fine up to S$1,000 if they fail to provide the 1 month notice with valid reason(s).
An Employee will be taxed on all incomes (base salary, commission, bonus, etc.) earned in Singapore and subject to the deduction of tax reliefs. The personal income tax rate is progressive and the highest marginal tax rate is 20%.
All resident individual taxpayers will be given a Personal Income Tax Rebate on the tax payable for the Year of Assessment. While the amount of rebate granted may change, the calculation depends on the age of the resident individual as of December 31st. The individual tax rebate is subject to a cap imposed by the Inland Revenue Service.
The Central Provident Fund (CPF) is a compulsory savings plan for employees in Singapore. It funds a range of social security schemes, including retirement, healthcare and housing, and is maintained by the CPF Board.
Statutory contributions in Singapore are made to the CPF by the employer and the employee. Contributions go into three accounts:
When an employee turns 55, a fourth Retirement Account (RA) is created for them, designed to provide savings for retirement.
CPF contributions must be paid by Singapore Citizens and Singapore Permanent Residents who are working in the city under a Contract of Service - or who are employed in a permanent, part-time or casual basis. Contributions are not mandatory for those workers employed overseas.
Employers should pay CPF contributions within 14 days of the end of the month. They may access their accounts via an online CPF Singapore login portal - which offers access a range of useful tools.
The statutory contribution rates for a Singapore citizen and a 3rd year Singapore Permanent Resident (SPR) below the age of 50 and an income level of above S$1,500 (applicable to over 90% of employees) are 50% - a 50/50 split between employer and employee..
New Starts (Singaporeans & permanent residents) do not need to be registered separately with the below authorities since their inclusion in the monthly CPF (Central Provident Fund) submission will suffice:
Employers of New Starts (foreigners) are required to apply for and obtain an employment pass/work permit before commencing employment. The application process for working passes for foreign New Starters will take approximately 5 weeks in the case of ‘hard copy’ applications, or 2 weeks to process online. Work visas for foreigners are granted by Singapore’s Ministry of Manpower - prior to commencement of employment.
The relationship between employer and employee in Singapore is regulated by contract - and subject to statutory requirements set out in both the Employment Act and common law. The contract should include details such as basic pay, work duties, annual leave and termination clauses.
Dismissal or Termination by Employer: If an employee is dismissed by their employer on grounds of misconduct, salary must be paid on the last day of employment.
If the contract of service is terminated by an employer, salary must be paid on the last day of employment or within 3 working days from the date of termination.
Termination by employee:
If an employee has resigned and served their notice period, salary must be paid on the last day of employment. If an employee terminates their contract without notice, salary payment must be paid within 7 working days of the last day of employment.
For Foreign Employee (i.e., on working passes):
A company is required to withhold all monies due to an employee and inform IRAS via Form IR21 (Notification of a non-citizen employee’s cessation of employment or departure from Singapore) at least 30 days before the date of cessation of employment. The Form IR21 is required to facilitate tax clearance by IRAS before a foreign employee leaves Singapore. Form IR21 is also applicable for a permanent resident employee who intends to leave Singapore for more than three months or permanently after cessation of employment.
For Singaporean and permanent resident:
Notifications are made to the CPF Board via CPF contributions indicating the date of resignation.
Payroll processing in Singapore involves specific rules and regulations - and should take the status of foreign workers into account. There are no monthly withholding obligations for employers in Singapore but contributions to social security schemes, including the CPF, the Skill Development Levy and the Foreign Workers Levy, are required.
Singapore has legislation which requires itemised payslips to be issued to all employees - it is legally acceptable to issue payslips online. Payslips must include details of employment such as date of payment, basic salary amount, deductions made, and net monthly salary.
Singapore’s main employment legislation is The Employment Act which sets out the basic legal working conditions for all employees in the city, including foreign employees. Other important employment laws include:
Beyond basic statutory regulations, the relationship between employer and employee in Singapore is primarily governed by the terms set out in the employment contract. From the 1st April 2016, legislation states that contracts must set out Key Employment Terms (KET) including: