Singapore payroll and tax overview.

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 Ease of Doing Business Survey 2018. 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%. Major industries in the city include financial services, manufacturing and a range of high technology products. A parliamentary republic with a stable political and economic system, Singapore holds a significant amount of regional influence: it is one of five founding members of ASEAN, a member of the East Asia Summit, and hosts the Asia-Pacific Economic Cooperation Secretariat.

Why Invest in Singapore?

Singapore's growing economy is fertile ground for business - and provides a range of investment opportunities:

• International gateway: Singapore is an international trade hub and a gateway to the APAC region. Businesses in the city take advantage of strong communication and transport links (including air and sea), while benefiting from trade agreements with a number of neighbouring markets.
• Tax rate: The corporate tax rate in Singapore is capped at 17%, attracting a range of international corporate interests. Singapore also offers a range of tax advantages, including progressive personal income tax rates, no capital gains tax, and no tax on foreign income for non-resident taxpayers.
• Economic strengths: Singapore is a highly developed economy and leads the world in a number of sectors. The major industries of Singapore include manufacturing, oil refining and financial services, while a range of emergent sectors, such as integrated electronics, big data, and biomedical sciences, are becoming prominent.
• Regulation: Businesses in Singapore benefit from a robust and transparent regulatory framework, with a range of checks and balances in place to ensure fairness and security for the organisations operating within the city.
• Skilled labour: Singapore’s high-profile status in APAC - and across the world - attracts some of the best talent to its professional roles. Businesses in the city are able to recruit from a competitive pool of highly-skilled employees.

Foreign Direct Investment in Singapore

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 around the world.

Registering a Company and Establishing an Entity in Singapore

The company is required to apply for a CPF Submission Number (CSN) as soon as they intend to hire any Singapore citizen or Singapore permanent resident employee. The CPF Submission Number (CSN) is assigned by the CPF board to be used to perform transactions with the CPF Board. The CSN comprises your UEN and CPF payment code.

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 CPF Submission Number (CSN) is the number assigned by the CPF board to transact with them. The CSN comprises your UEN and CPF Payment Code.

Singapore Corporate Access (CorpPass) will be required for all local entities with a Unique Entity Number (UEN) and for foreign entities who wish to access Government-to-Business (G2B) digital services in Singapore (such as CPF Board, IRAS, National Service, Government-Paid Leave Portal, etc). CorpPass is a one-stop authentication and authorisation service, for corporate users to transact with government agencies online on behalf of their organisations. For more information, click here.

Business Banking in Singapore

It is not mandatory to make payments to employees or the authorities from an in-country bank account in Singapore.

What Are the Working Days and Working Hours in Singapore?

The working week in Singapore is Monday to Friday, generally 8 hours per day and 40 hours a week. Some companies work a 5.5-day week, from Monday through to Saturday.

Basic Facts about Singapore

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 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: 5.612 million (World Bank, 2017)

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

The Tax Year runs from 1st January to 31st December.

In Singapore, there is no income tax withholding at source via payroll throughout the tax year. It is the employee’s responsibility to file their annual tax declaration and pay directly to the Inland Revenue Department (IRD), the local tax authority.

All employers are required by law [S68(2) of the Income Tax Act] to prepare Form IR8A and Appendix 8A, Appendix 8B or Form IR8S (where applicable) for all employees who are employed in Singapore by 1 March each year. Employers who have 7 or more employees for the entire year ending 31 December, or who have received the "Notice to File Employment Income of Employees Electronically" must submit their employees' income information to IRAS electronically by 1 March (Eg. To submit their employees' income information for 01 Jan – 31 Dec 2019 to IRAS electronically by 1 March 2020).

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 one month for its foreigner employees, i.e., non-Singapore citizen employees (including Personalised Employment Pass Holders) under the following circumstances:

• Ceases to work in Singapore;
• On overseas posting;
• They leave Singapore for any period exceeding three months

The company may be liable to a fine up to SGD 1, 000 if it fails to provide the one 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 22%.

Social Security in Singapore

The Central Provident Fund (CPF) is a comprehensive social security savings plan that has provided many working Singaporeans with a sense of security and confidence for their retirement years.

The employer is required to pay both the employer’s and employee’s share of CPF contributions every month if you earn more than $50/month. He/she is entitled to recover the employee’s share from your wages. CPF contributions are payable for Singapore Citizens (SC) and Singapore Permanent Residents (SPR) who are:

• working in Singapore under a Contract of Service (including Directors if they are engaged under a contract of service and paid a salary on top of any fee received); and
• employed under a permanent, part-time or casual basis

CPF contributions should be determined based on the employee’s total wages for a calendar month. When wages are not paid according to the calendar month (e.g. weekly or fortnightly), employers have to allocate the wages according to the calendar month. This is necessary as it determines the Ordinary Wages for the calendar month on which CPF contributions are payable.

Allowances and Payments that Attract CPF Contributions

The list of allowances and payments that attract CPF contributions can be found here.

Employers are given a grace period of 14 days after the end of the month to pay the CPF contributions. For example, contributions for December 2019 must be paid by 14 January 2020. If the 14th falls on a weekend or public holiday, CPF contributions must be paid by the next working day. Interest on late payment is calculated daily at the rate of 1.5% per month, starting from the first day of the following month after the contributions are due (e.g. interest for January contributions will be calculated from 1 February). The minimum interest payable is $5 per month.

Example

XYZ Company made a CPF contribution of $3,000 for the month of December 16 on 20 January 2017. This payment is late by 19 days. Therefore, the amount of late payment interest will be:

= $3,000 x 1.5% x 19/30*

= $28.50

*Number of days the payment is late/number of days in the month.

The cents should be dropped for the interest. Hence, the late payment interest payable will be $28.

CPF contributions are not mandatory for Singapore citizens or Singapore Permanent Residents (SPR) working overseas. CPF contributions are payable at the prevailing CPF contribution rates for employees who are Singapore citizens and Singapore Permanent Residents.

New Employees in Singapore

New starts (Singaporeans & permanent residents) do not need to be registered separately with the below authorities. Their inclusion in the monthly CPF (Central Provident Fund) submission will suffice.

• Inland Revenue Authority of Singapore
• Singapore Workforce Development Agency
• Ministry of Manpower

Employers of new starts (foreigners) are required to apply for and obtain an employment pass/work permit before they are able to commence employment.

Application of working passes for foreign new starters will take approximately eight weeks for the authorities to process hardcopy applications or three weeks to process online applications. Also, the employer may be required to advertise the job opening on MyCareersFuture to consider all applicants fairly, before they can apply for an Employment Pass.

For Singaporean and permanent residents:

• If the mode of submission is via hardcopy Payment Advice (Form CPF 91), then Form CPF 92 (New Employee Contribution Form) is required to be completed and submitted together.
• If the mode of submission is via online, Form CPF 92 is not required.

The expatriate new start must have a valid Working Pass before the commencement of employment.

Leavers in Singapore

Dismissal or Termination by Employer:

If the employer on grounds of misconduct dismisses the employee, the salary must be paid on the last day of employment.

If the employer terminates the contract of service, the salary must be paid on the last day of employment or within three working days from the date of termination.

Termination by Employee:

If the employee resigned and served the notice period, salary must be paid on the last day of employment.

If the employee terminates the contract without notice, salary payment must be paid within seven working days of the last day of employment.

For Foreign Employee (i.e., on working passes):

The company is required to withhold all monies due to the 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 the foreign employee leaves Singapore.

Form IR21 is also applicable for 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. Foreign companies setting up in Singapore may choose to engage a global payroll provider to help them navigate the city’s compliance regulations, and ensure that their employee populations are paid accurately and efficiently.