Payroll taxes in Singapore: An employer’s guide

When you hire in Singapore, you — as the employer — are responsible for calculating, withholding, and submitting payroll taxes from your team members’ pay slips. For some taxes, you are also required to make employer contributions.

In this article, we’ll explain clearly which taxes you need to withhold, which taxes you need to contribute to, and how to remit and make payments. So let’s jump straight in.

What is payroll tax?

Payroll taxes are the contributions employees and businesses make to the government to fund public programs, such as retirement, healthcare, and unemployment insurance. They typically include income tax and social contributions, and are set at pre-determined rates.

These rates (and the rules governing them) vary by country, but it’s every employer’s responsibility to ensure they are compliant, and that they are withholding and submitting the correct amounts.

What is the difference between payroll taxes and corporate taxes?

Generally, payroll taxes are tied to your employees’ wages, while corporate taxes are based on your company’s profits. 

Which payroll taxes do you need to withhold from your employee in Singapore?

In Singapore, the taxes you’ll need to withhold are:

Employee Central Provident Fund (CPF) contributions

The CPF is Singapore's national pension scheme, designed to provide financial security for workers in retirement.

Employees contribute 20% of their monthly wages, capped at a maximum wage ceiling of SGD 6,800. This means the maximum employee contribution is SGD 1,360 per month.

Reduced contribution rates apply for employees earning less than SGD 750 per month and for those above 55 years of age. These rates are being gradually increased to enhance retirement adequacy.

When to pay: Payments are due by the 14th of each month for the previous month's wages. If the 14th falls on a weekend or public holiday, payment is due on the next working day.

Note that, in Singapore, employers do not withhold income taxes from their employees. Employees are responsible for filing and paying their own income tax. However, you must still file an IR8A form to report each employee’s earnings to the Inland Revenue Authority of Singapore (IRAS).

You may also be required to withhold additional taxes for certain employees, such as child support payments, student loan repayments, or any other court-ordered garnishments.

Which payroll taxes does your business need to contribute to?

As well as withholding the contributions listed above, you are also required to make your own contributions, as follows:

Employer Central Provident Fund (CPF) contributions

Employers are also required to contribute to the CPF. You must contribute 17% of your employees’ monthly wages (capped at the same wage ceiling of SGD 1,360).

When to pay: At the same time as your employee contributions (see previous section).

Skill development levy (SDL)

The SDL funds the training and development of Singapore's workforce. Employers are required to pay this levy for all employees, including foreign workers.

This rate is set at 0.25% of the monthly total wages for each employee, with a minimum of SGD 2 and a maximum of SGD 11.25 per employee per month.

When to pay: At the same time as your CPF contributions.

Note that, if your hire is working in Singapore on a work permit or S Pass, you will also need to pay a foreign worker levy. The levy rate varies depending on your industry, your employee's qualifications, and your company's ratio of foreign to local employees in Singapore.

To quickly see a full breakdown of payroll taxes and employment costs for your Singaporean hire(s) based on their salary, use our free Employee Cost Calculator tool.

How do you remit and pay payroll taxes in Singapore?

To pay these taxes, you will first need to calculate the correct amounts for withholding. If you use Remote Payroll or Remote EOR, we will do this for you.

For CPF contributions, use the CPF Board's online portal to submit the CPF contribution details. Payments can be made via GIRO, eNETS, or other approved methods.

SDL (and, if applicable, FWL) payments can also be processed through the CPF Board's online system, often in conjunction with CPF contributions.

How do you manage payroll taxes as an international employer?

When you hire a Singapore-based team member from abroad, there are several ways you can manage their payroll and payroll taxes.

If you already have your own legal entity in Singapore, you can:

• Handle it in-house. You can hire your own payroll tax specialists and manage everything internally. This can be costly, however.

• Use a local third party. You can hire a local firm to handle payroll, although this can be unreliable, costly, and pose data risks.

• Use a PEO. A professional employment organization (PEO) acts as an outsourced HR provider, and includes payroll.

• Use a global payroll provider. Global payroll providers — like Remote — have local specialists in multiple countries, ensuring that you are fully compliant with all tax requirements in each one. This is especially convenient if you have (or plan to have) employees in different countries, as you can manage all of them through one platform.

If you don’t have your own entity in Singapore and you still want to hire there, you can:

• Set up your own entity. This can be extremely costly and time-consuming, but if you plan on establishing your business long-term in Singapore, it might be a viable approach. To pay your employees, you would then need to choose one of the options above.

• Use an EOR. Employer of record (EOR) providers — like Remote — enable you to quickly and easily hire anywhere in the world, and also handle all the core HR functions (such as compliance and payroll). As well as being generally more cost-effective than opening your own entity, this option is highly scalable and, again, enables you to streamline all your global HR tasks in one place. How does an EOR work?

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EOR, Payroll, or both: What does your business need?

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What about independent contractors?

In Singapore, independent contractors are classified differently to employees. As a result, they (in most cases) are responsible for calculating, managing, and paying their own taxes.

However, it’s crucial to understand the difference between contractors and employees, as you may inadvertently create misclassification risk. This can result in severe fines and penalties for your business. Learn more about hiring contractors in Singapore.

How can Remote help?

Knowing which payroll taxes you need to calculate, withhold, and contribute to requires local expertise, especially as these rules can — and do — change. And if you make a mistake or fail to comply, the financial consequences can be significant.

Whether you have your own entity in Singapore or not, Remote ensures that you are withholding and contributing the correct amounts, and that you are fully compliant at all times with local tax and employment laws. We also provide 24/7 support for any guidance you may need.

To see how we can help — and to learn which approach is the most suitable for your business — speak to one of our friendly payroll experts today.

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