Whether you’re setting up operations or you’re joining a team there, here’s what you need to know about payroll in Singapore. Learn more in our ultimate guide.
Singapore’s reputation as a formidable business region makes it one of the world’s busiest business hubs in the world, and a gateway for organisations to establish their presence in Asia. Many companies are drawn to the ease of conducting business in the country, and with this comes attractive opportunities for top talent across the world.
While Singapore’s tax, legal, and financial systems are straightforward, there are still payroll compliance requirements unique to the country that business leaders need to be across. Here's what you need to know.
Singapore is one of just a few countries that does not have a minimum wage requirement. The personal income tax for residents ranges from 0% to 22%, with the highest tax bracket for incomes above SGD 320,000. However, employers in Singapore are not obligated to withhold taxes from an employee's salary each month, meaning your people are responsible for paying them on their own. However, you must provide employees with an employee remuneration return.
Despite the high tax bracket, Singapore allows tax relief for individuals who don't work the entire year in the country through the "Not Ordinarily Resident (NOR) scheme. To be eligible, the employee must meet non-Singapore resident requirements for three years before becoming a Singapore tax resident. Further, they must be an employee of a Singapore-based company, earn at least SGD 160,000 and spend more than 90 days outside of Singapore for business purposes.
Individuals in Singapore who work for a foreign employer with representative operations in the country can also enjoy tax relief or even exemption through the Area Representative Scheme.
Paid annual leave is available to employees who have been working at their organisations for a minimum of three months. The number of days an employee is entitled to depends on their service length, ranging from seven days for one year of service up to 14 days for eight or more years. Paid leaves between three and 12 months of service are prorated.
Paid sick and hospitalisation leaves are available after the employee has worked for six months. For new employees, paid sick leave is prorated according to the length of service, but they must have worked at least three months to be entitled. The maximum amount of leaves an individual may take in one year is 60 days, capped at 14 days of sick leave and 46 days of hospitalisation leave.
Women are entitled to a minimum of eight weeks of government-paid maternity leave. To be eligible, the mother must have worked at the same organisation for at least three months before their child's birth, both mother and child must be Singaporean citizens, and the mother must be legally married to the father of their child.
Two weeks of government-paid paternity leave is available to fathers who have been married to the mother of their child from conception to birth. In addition, the child must be a Singaporean citizen, and the father must have worked for their employer for at least three months before the birth of their child.
The Ministry of Manpower website also lists other leave types such as adoption leave, childcare leave, shared parental leave, and unpaid infant care leave.
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Singapore's social security scheme is called the Central Provident Fund (CPF), made up of compulsory contributions made by employees to assist with their housing, healthcare, and other expenses upon retirement. Social security benefits are available for Singapore’s permanent residents and depend on the individual's monthly salary.
Several other funds exist to assist less privileged communities, such as the Chinese Development Assistance Council, Mosque Building and Mendaki Fund, Eurasian Community Fund, and the Singapore Indian Development Association.
Reporting and compliance
Employers are required to provide itemised payslips in hard or soft copy that include salary details such as period and date of payment, allowances, and overtime (maximum of 72 hours per month) Any deductions made must also be provided to the employee. Organisations that employ six or more workers will need to submit Form IR8A on behalf of their employees to report their remuneration for the previous year. Employers must also keep at least two years' worth of salary records for each employee and continue to do so up to one year after the employee has left the organisation.
Of course, these are just the basics of payroll compliance in Singapore. As with any country's payroll, there are many more complexities you'll need to be across. If you’d like to learn more about setting up a payroll processing system in Singapore or the rest of Asia Pacific and Japan, download our free guide.