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Payroll & Tax in Singapore

Singapore payroll & taxation

There are specific rules for payroll and taxation in Singapore, depending upon whether your company employs foreign nationals or local employees. The primary concerns for a foreign company that needs to comply with tax laws in Singapore are: individual income tax (IIT) for employees in Singapore, social security costs, payroll tax, employee compensation insurance, withholding tax, business tax and permanent establishment concerns. For many companies using a local specialist payroll provider will simplify this process and ensure full compliance with local laws.

Here's our most recent article on running payroll and taxes in Singapore.

Your Payroll Options in Singapore

Remote Payroll

A remote payroll in Singapore is where a foreign company, i.e. a non-resident company payrolls a resident employee in Singapore. This is not strictly possible as a foreign company must register an entity in Singapore (e.g. a Singapore branch office) before commencing any business activities in Singapore. So the foreign company must register a branch office and can then administer payroll through the branch. One option for a non-resident company to payroll its employees (local and foreign) in Singapore is to use a fully outsourced service like a GEO which will employ and payroll the staff on their behalf.

Local Payroll Administration

In some cases, a company will register their business in Singapore under one of the forms available, (RO, BO or Subsidiary) but prefer to have another company administer its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with a commitment to Singapore may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Singapore payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Singapore employment laws.

Fully Outsourced Payroll & Employment

Companies can outsource the employment and payroll of their staff in Singapore to a GEO, like Shield GEO. This is possible for both foreign workers and Singapore nationals. This is the easiest, fastest and safest way to payroll staff in Singapore.

Shield GEO manages all aspects of payroll for workers in Singapore, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Singapore

Information Explanation
Currency ?

SGD Singapore Dollar

Employee Information Required ?

Singaporean citizens and Singapore permanent resident cardholders may work at will. Foreign workers and expatriates must possess valid visas, work passes, and employment passes prior to commencing work.

The personal information required from new employees is contained in the Shield CIF and includes name, gender, NRIC, nationality, passport details, address and bank account details.

Tax Registration Requirements ?

Tax Identification Numbers are automatically included on employees’ Employment Passes and/or other work permits.

Employers have the obligation to prepare an annual wage report Form IR8A and Appendix 8A, Appendix 8B, or Form IR8S (where applicable) for their employees. The documents must be passed to the employees by the 1st of March in the year following the employment year (1 Jan – 31 Dec). Employees use these reports to prepare and file their income tax returns. (There is no income tax deducted from an employee’s monthly salary payments. Employees pay their own income taxes.)

Social Security Registration ?

The Central Provident Fund (CPF) administers social security in Singapore. CPF schemes mainly offer social security in Singapore to local employees and most foreign employees are required to seek out their own social security coverage.

Documentation Required for New Employees ?

The following documentation relating to the employee is required for onboarding:

For locals

  • Copy of passport
  • Copy of NRIC (for permanent residents)

For expats

  • Copy of passport
  • Copy of ID (front and back)
  • Educational and technical qualifications
  • CV
  • Photographs
  • Police check
  • Medical exam results

 

Corporate Income Tax Rate

The corporate income tax rate is 17%. 

75% of the first SGD10,000 of taxable income and 50% of the next SGD290,000 of taxable income are tax-exempt. A new private company may be entitled to a tax exemption on the first SGD100,000 of taxable income and 50% of the next SGD200,000 of taxable income for the first three consecutive years of assessment, subject to certain conditions.

Payroll Tax

There are no payroll taxes in Singapore.

Sales Tax

GST is levied at 7% on the supply of goods and services. Financial services including life insurance, the sale/rental of residential properties, the import and supply of investment precious metals, and exports are exempt from GST.

Withholding Tax

Dividends – None

Interest – 15% (for non-residents)

Royalties – 10% (for non-residents)

Technical Services – 17% (for nonresidents)

Tax is not withheld on dividend, interest, royalty or technical services income paid to residents.

 

Tax Figures

Information Explanation
Corporate Income Tax ?

17%

Income Tax Rate ?
Grossed income Tax Rate (%)
0 - 30,000 2
30,001 - 40,000 3.5
40,001 - 80,000 7
80,001 - 120,000 11.5
120,001 - 160,000 15
160,001 - 200,000 18
200,001 - 240,000 19
240,001 - 280,000 19.5
280,001 - 320,000 20
320,001+ 22

The tax rates above apply to residents only. Non-residents are taxed at a flat rate of 22%. The employment income of non-residents is taxed at either a flat rate of 15% or at the resident rates with personal allowances, whichever yields the higher tax.

Payroll Tax ?

N/A

Sales Tax ?

7%

Withholding Tax ?

N/A for resident companies

Income Tax (Personal Allowance) ?

The first SGD20,000 of an individual’s taxable income is exempt from tax.

Employee Social Security (EE SS)

Only Singaporean citizens and permanent residents are required to contribute to the Central Provident Fund (CPF) which is the national pension scheme. Expatriates are not required to make social security contributions.

Employees are required to contribute 20% of ordinary monthly wages to social security.

Employer Social Security (ER SS)

Only Singaporean citizens and permanent residents are required to contribute to the Central Provident Fund (CPF) which is the national pension scheme. Expatriates are not required to make social security contributions.

Employers are required to contribute 17% of ordinary monthly wages to social security.

Payments

Information Explanation
Payment Mode ?

Manual/soft copy by cheque or online.

Frequency of Salary Payment ?

Monthly i.e. 12 payrolls per year

Invoice / Payslips required ?

Employers are required to issue itemised payslips to employees.

Minimum Wage ?

There is no national minimum wage in Singapore.

Employee Entitlements

Information Explanation
Medical Leave ?

The number of days of paid sick leave a new employee is entitled to depend on his service period.

E.g. employed for 3 months, 5 days paid outpatient leave / 15 days paid hospitalization

Employment Termination

Information Explanation
Termination of Employment ?

Monthly as event occurs.

Singapore

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