A Complete Guide for Payroll in Singapore

Running payroll functions in Singapore is pretty straightforward transparent as compared to other countries and is a highly desirable choice for multinational businesses who want to expand in that region. However, payroll in Singapore involves specific laws and regulations that should be followed while running payroll operations.

Many companies based in Singapore have employees, both residents, and non-residents, and based on the employee’s residency status there are different aspects to pay attention to including contributions to the Central Provident Fund (CPF), maternity pay, and leave and income tax plus the foreign worker’s levy. Managing your payroll, therefore, can become time-intensive and complicated. 

This payroll guide for Singapore will help you to understand more about the payroll functions and to ensure that payroll activities are conducted in compliance with Singapore laws and regulations.

payroll-taxes

Payroll Process in Singapore

Payroll processing refers to the process performed by companies to pay their employees, mostly on a set date every month.

Payroll processing in Singapore has to be managed properly even if it is simple and transparent, as it involves specific rules and regulations – and should take the status of resident and non-resident workers into account. If not handled properly then it may lead to discrepancies and affect the payroll accounting which will result in inaccurate report data for income tax filing.

Payroll processing in Singapore requires contributions to social security schemes, including the CPF, the Skill Development Levy, and the Foreign Workers Levy, however, there are no monthly withholding obligations for employers in Singapore.

Employers in Singapore usually process payroll considering performance evaluation, paying year-end bonuses, medical leave, statutory claims, etc.

Payroll process workflow includes:

  • Payroll setup
  • Raw data collection and cleaning
  • Payroll processing
  • Payroll payment/payslip
  • Statutory submission
  • Annual report for individual income tax
  • Employee payroll data maintenance
  • Year-end payments like bonuses, etc.

To make payroll management successful, companies should have accurate payroll processing, good maintenance, and timely disbursement. This would help in motivating employees and keeps staff optimistic other than ensuring compliance.

Minimum Wage in Singapore

Singapore is one of the most attractive countries in the world for expats and foreign workers, making the country’s economy so dynamic. And unlike many highly developed countries, Singapore does not have any minimum wage/salary requirement for all workers in Singapore, whether local or foreign. Few key points to be noted:

  • The Employment Act does not regulate the minimum salary every employee must be paid.
  • In other words, there is no minimum salary requirement and it is subject to negotiation between the employer and the employee.
  • Workers in Singapore (whether local or foreigner) are paid based on their skills, capabilities, and competencies which in result helps companies to motivate their staff and retain valuable workers.
  • In accordance with the Employment Act, the salary must be paid at least once a month within 7 days after the end of the salary period.
  • Overtime pay, if applicable, must be paid within 14 days of the stipulated salary period.
  • There is no requirement for bonus payment under the Employment Act of Singapore.
hire-employees-usa

Individual Income Tax in Singapore

Singapore follows a progressive income tax system and its straightforward legal and financial system attracts many businesses worldwide.

Any income that accrues in or is derived from Singapore is taxable. Resident Individuals are eligible for certain personal allowances and are subject to tax rates which start from 0% to 22% on income above SGD 20,000. Whereas, non-resident individuals are not entitled to any personal allowances and are subject to a flat rate of 22%.

Employers in Singapore are not under any obligation to withhold taxes on employee’s pay each month, therefore, employees are responsible to file their own taxes and pay directly to the local tax authority ‘’Inland Revenue Department (IRD)’’.

However, employers are required on a mandatory basis to prepare annual wage reports 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.

Chargeable IncomeIncome Tax Rate (%)Gross Tax Payable (S$)Total Income Tax in this Income Bracket (S$)
First $20,000
Next $10,000
0
2
0
200
200
First $30,000
Next $10,000

3.50
200
350
550
First $40,000
Next $40,000

7
550
2,800
3,350
First $80,000
Next $40,000

11.50
3,350
4,600
7,950
First $120,000
Next $40,000

15
7,950
6,000
13,950
First $160,000
Next $40,000

18
13,950
7,200
21,150
First $200,000
Next $40,000

19
21,150
7,600
28,750
First $240,000
Next $40,000

19.50
28,750
7,800
36,550
First $280,000
Next $40,000

20
36,550
8,000
44,550
First $320,000
In excess of $320,000

22
44,550

Social Security (Employer and Employee) in Singapore

Statutory Benefits refer to all the advantages that the government of a country provides to its residents with an intention to promote population welfare through various schemes or insurances.

Likewise, in Singapore, the social security system has three aspects:

  • Retirement
  • Healthcare
  • Social welfare where CPF (Central Provident Fund) plays the key role in Singapore’s comprehensive social security system

CPF is the mandatory social security benefits that are contributed by both employees and employers through deductions in their salaries and fulfills the retirement, housing, and healthcare needs.

Under the law, it is the obligation of the employer to remit any mandatory CPF contributions to the CPF Board. Social security or Central Provident Fund (CPF) contributions are mandatory for Singapore citizens and Singapore permanent residents (“SPRs”) who are employed in Singapore. Under this scheme, employers and employees make contributions at the prevailing contribution rates as per their wages and age group of the employee.

The contribution rates for different age groups and SPR status are as shown in the table below:

social-security-rates-singapore


On the other side, employers are also obliged to contribute (on behalf of their employees) to the Skills Development Fund (SDF) at a levy rate of 0.25 percent up to the first $4,500 SGD of gross monthly remuneration. There’s also a grant to employers from the SDF in respect to provide or send employees for training.

Payslip in Singapore

The Ministry of Manpower announced the mandatory ruling of issuing a written statement of pay under the Employment Act 2016 in Singapore. The legislation was introduced where employers must provide the itemized payslip to all employees whether formatted in soft copy or hard copy.

  • Payslips are supposed to be given together with payment to employees.
  • If not given together, then within three working days of the payday.
  • For leavers, must give payslip together with outstanding salary.

The law requires full payslips to describe a comprehensive breakdown of an employee’s salary, which means, it must include details of employment such as date of payment, basic salary amount, allowances, bonuses and deductions made, and net monthly salary. Below list shows the items to be described in payslip:

Payslip Item description
Full name of employer.
Full name of the employee.
Date of payment (or dates, if the payslips consolidate multiple payments).
Basic salary

 

For hourly, daily, or piece-rated workers, indicate all of the following:

  • The basic rate of pay, e.g. $X per hour.
  • The total number of hours or days worked or pieces produced.
Start and end date of the salary period.
Allowances paid for salary period, such as:

 

  • All fixed allowances, e.g. transport.
  • All ad-hoc allowances, e.g. one-off uniform allowance.
Any other additional payment for each salary period, such as:

 

  • Bonuses
  • Rest day pay
  • Public holiday pay
Deductions made for each salary period, such as:

 

  • All fixed deductions (e.g. employee’s CPF contribution).
  • All ad-hoc deductions (e.g. deductions for no-pay leave, absence from work).
Overtime hours worked.
Overtime pay.
Start and end date of the overtime payment period (if different from item 5 start and end date of salary period).
Net salary paid in total.

How We Can Help You with Payroll in Singapore

To run successful payroll management, it is very important for companies to handle with accuracy, good maintenance, detailed employment records, and timely disbursement in compliance with local regulations.

The payroll processing cannot be performed hastily as the consequences can be grave due to employee dissatisfaction and can even result in penalties for the employer. It is also true that as your business grows and with the rising employee population, handling payroll becomes complex. Therefore, payroll processing requires more time and effort.

To avoid such issues, you may find outsourcing to a payroll service provider more cost-effective and less stressful than trying to manage this function in-house.

NNRoad’s core expertise offers end-to-end payroll management solutions to foreign small and medium-sized enterprises worldwide. Regardless of your company size or requirements – be it full corporate payroll services or limited processing services, we can efficiently and securely manage your payroll saving you time and huge costs. We can support your company with full payroll outsourcing in Singapore.

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