Running payroll functions in Singapore is pretty straightforward and 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 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.
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 Income | Income 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 |