4 Things Overseas Employers Should Know About Singapore Payroll and Tax
When you are employing expats in Singapore, there are four things that you should know about running payroll and taxation before you begin the process. The Employment Pass is the most common work permit, and has different payroll and tax rules than for residents.
When you are employing expats in Singapore, there are four things that you should know about running payroll and taxation before you begin the process. The Employment Pass is the most common work permit, and has different payroll and tax rules than for residents. You can find a full review of all payroll, tax and immigration rules in Singapore here, along with a comparison of your choice of a DIY payroll approach or using the Shield GEO employer of record service.
1. Tax Rates in Singapore
Tax rates range from 0-22% on gross income for your employees, after deductions. Employees are responsible for their own tax payments, and the typical PAYE system is not required for tax deductions from the monthly pay check.
However, in the event of employee termination or resignation, the employer must file a tax clearance return to ensure full payment of taxes due to date. This should be filed one month prior to departure from Singapore, and unpaid employee taxes are the responsibility of the employer. For this reason, it is a good idea to make sure employees are paying taxes as they are due.
2. Running Payroll in Singapore and Banking
Although you will need a local corporate office or entity to run payroll in Singapore, you do not have to have a local bank account. This makes it simpler for companies just entering Singapore, but it is easier to meet payroll and tax obligations if you have local account since the payroll itself must come from a registered Singapore branch or entity.
3. Paid Leave in Singapore
There is an array of statutory paid leave for all employees in Singapore including:
- Seven days of annual leave per year, with an additional day for every year of service
- All public holidays
- Six days of paid childcare leave
- Fourteen days of paid sick leave
- Sixty days of paid hospitalization leave
- Sixteen weeks of maternity leave, with a minimum of eight weeks paid
4. Social Security (CPF) Contributions in Singapore
The Central Provident Fund for social security contributions is only mandatory for citizens and residents of Singapore. Therefore, Employment Pass holders do not need to contribute or have the amount deducted from the payslip.
Many of these rules make employing overseas workers in Singapore simpler than in some countries, but if you don’t have a local corporate entity you cannot run a remote payroll (paying the employee from the home country payroll).
Companies just entering Singapore or with a low commitment to the market will use the Shield GEO local employer of record for both payroll and immigration compliance. Our local partner will take care of every part of payroll and tax compliance for you, which saves your company the time and expense of setting up a local branch and then running a DIY payroll.
Shield GEO makes international employment simple. Our customers use Shield GEO to employ and payroll hundreds of workers in over fifty countries. Find out more.