75% of the first SGD 10,000 of taxable income and 50% of the next SGD 290,000 of taxable income are tax-exempt. A new private company may be entitled to a tax exemption on the first SGD 100,000 of taxable income and 50% of the next SGD 200,000 of taxable income for the first three consecutive years of assessment, subject to certain conditions.
Corporations are required to file an estimate of its income within 3 months of the end of the accounting period, and report its actual income by 30 November of the tax year. The Comptroller of Income Tax assesses the tax payable. Tax is payable within 1 month after a notice of assessment is served to the corporation.
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
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.
Income Tax (Personal Allowance)
The first SGD 20,000 of an individual’s taxable income is exempt from tax.
Tax Year End Date
31 December
Tax Year End Documents
Form IR8A
Are tax residents subject to tax on their global income
Tax residents are only subject to income tax on income derived from Singapore.
Time to prepare and Pay Taxes
64 hours
Employers Social Security and statutory contributions
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.
Employees Social Security and statutory contributions
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 Limits
The maximum monthly contribution is SGD 1,020.
Employee Social Security Limits
The maximum monthly contribution is SGD 1,200.
Payroll
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.
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.
Setting up payroll in Singapore
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
Standard Payroll Cycle
Monthly
Standard Payment Date Per Month
Last working day or last Friday of the month
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.
Singapore Taxation
Tax Figures
Corporate Income Tax
The corporate income tax rate is 17%.
75% of the first SGD 10,000 of taxable income and 50% of the next SGD 290,000 of taxable income are tax-exempt. A new private company may be entitled to a tax exemption on the first SGD 100,000 of taxable income and 50% of the next SGD 200,000 of taxable income for the first three consecutive years of assessment, subject to certain conditions.
Corporations are required to file an estimate of its income within 3 months of the end of the accounting period, and report its actual income by 30 November of the tax year. The Comptroller of Income Tax assesses the tax payable. Tax is payable within 1 month after a notice of assessment is served to the corporation.
Income Tax Rate
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
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
Tax is not withheld on dividend, interest, royalty or technical services income paid to residents.
Income Tax (Personal Allowance)
The first SGD 20,000 of an individual’s taxable income is exempt from tax.
Tax Year End Date
31 December
Tax Year End Documents
Form IR8A
Are tax residents subject to tax on their global income
Tax residents are only subject to income tax on income derived from Singapore.
Time to prepare and Pay Taxes
64 hours
Employers Social Security and statutory contributions
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.
Employees Social Security and statutory contributions
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 Limits
The maximum monthly contribution is SGD 1,020.
Employee Social Security Limits
The maximum monthly contribution is SGD 1,200.
Payroll
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.
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.
Setting up payroll in Singapore
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:
Standard Payroll Cycle
Monthly
Standard Payment Date Per Month
Last working day or last Friday of the month
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.
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Updated on November 8, 2020 by Asean Resources
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