Payroll Software Solutions

COUNTRY FACT SHEET: SINGAPORE

Courtesy of PayAsia

SINGAPORE

 

Capital:Singapore

Surface area:1 thousand sq km

Official languages: Malay; Chinese (Mandarin); Tamil; English

Population: 5.618 million (2015)

Exchange rate: A$1 = S$1.06 (Mar 2015)

Singapore today enjoys a per capita GDP higher than that of most developed countries. The economy relies heavily on exports, particularly in consumer electronics, information technology products and on a growing financial services sector.

As an individual, working in Singapore can be a highly rewarding experience, an opportunity to live in Asia with an extremely high standard of living, high earning rates and paying very low rates of income tax!

To start an international company in Singapore requires Singapore Government permits and adherence to local payroll regulations. Companies need to educate themselves regarding clauses included in employment contracts and statutory requirements such as;

CPF rates

Central Provident Fund (CPF) (Similar to Australian version of Superannuation) is a compulsory comprehensive savings plan which is designed to fund retirement, housing and healthcare of local Singaporeans. This needs to be paid for all local employees recruited by a Singapore entity. The rates of CPF differ based on whether a person is first, second or third year permanent resident or a citizen.

The standard rate of CPF currently stands at 17 per cent on total wages for the employer and 20 per cent on total wages for the employee’s contribution.

Self-help funds

These are four self-help groups as part of a community building exercise for the respective communities. Contributions vary for each. Muslim contribution is compulsory whilst the rest are voluntary.

Mosque Building and MENDAKI Fund (MBMF)

All working Muslim Singapore Citizens, Singapore Permanent Residents and foreigners are required to contribute to the MBMF according to wage levels.

Chinese Development Assistance Council (CDAC)

From 1 September 1992, all working Chinese Singapore Citizens and Permanent Residents should contribute monthly to the CDAC Fund according to the wage level drawn by the employee.

Eurasian Community Fund (ECF)

All employees belonging to the Eurasian Community (Singapore citizens and permanent residents) may contribute monthly to the Eurasian Community Fund according to their wage levels.

Singapore Indian Development Association (SINDA) Fund

All employees belonging to the Indian Community need to contribute monthly to the SINDA Fund according to their wage levels.

Skills Development Levy (SDL)

This is mandatory. Employers have to contribute for all up to the first $4,500 of gross monthly remuneration at a levy rate of 0.25%, subject to a minimum of $2, whichever is higher.

Tax

This is a cumbersome area of payroll. Different tax rates apply to residents and non-resident individuals. The extent of your tax liability will depend on your tax residency status.

Local employees

  • No withholding tax is applicable.
  • No deduction of “tax at source” is required in Singapore.
  • Personal taxation is the sole responsibility of the employee.
  • As an employer, you must prepare Form IR8A for all your employees (who are employed in Singapore) by 1st Mar each year. An IR8A is an annual return summarising all monies paid to an employee. An employee should also declare this amount and pay taxes.
  • An alternate to providing a Form IR8A is to be part of Auto-Inclusion Scheme for Employment Income (AIS). Under this scheme, employers submit their employees’ income information to IRAS electronically. You need a minimum of 14 employees to take part in this scheme.

TAX RATES FOR RESIDENT INDIVIDUALS

FROM YA 2012 TO YA 2016

Chargeable Income Rate (%) Gross Tax Payable ($)
First $20,000
Next $10,000
0
2
0
200
First $30,000
Next $10,000

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

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

11.5
3 350
4 600
First $120,000
Next $ 40,000

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

17
13 950
6 800
First $200,000
Next $120,000

18
20 750
21 600
First $320,000
Above $320,000

20
42 350

For YA 2015, a personal income tax rebate of 50% of net tax payable, up to maximum of $1,000 is granted.

Foreign and Permanent Resident employees

Tax Clearance is a process of ensuring that your non-citizen foreign employee pays all his taxes when he ceases employment with you in Singapore or plans to leave Singapore for more than three months.

You must seek tax clearance by filing Form IR21 at least one month before the non-citizen employee:

  • Ceases to work for you in Singapore; or
  • Is on overseas posting; or
  • Leaves Singapore for any period exceeding three months.

If you are unable to give 1 month’s notice, please state your reasons when you file the Form IR21. Unless the Controller accepts a shorter notice, employers who do not comply may be liable to a fine up to S$1,000 .

– See more at: http://www.austpayroll.com.au/announcements/country-fact-sheet-singapore?inf_contact_key=33daeda4e5689fb355d9f7494b1a43cddcfadcf244b3bc9dae3c67ac38c3065c#sthash.OdR8s93u.dpuf