Payroll and Employment Taxes in Singapore

Overview of Payroll Taxes in Singapore

Understanding payroll and employment taxes in Singapore is crucial for every business, whether you're running a cozy café or managing a multinational team. Employers need to navigate income tax withholding responsibilities, mandatory Central Provident Fund (CPF) contributions, levies like the Skills Development Levy (SDL), and, if applicable, the Foreign Worker Levy. Getting payroll wrong can lead to penalties, employee dissatisfaction, and strained relations if wages are withheld or miscalculated.

This guide helps you tackle key payroll components—calculations, filing deadlines, and compliance procedures—while keeping in mind that requirements can vary depending on employee age, residency status, salary levels, and whether you hire local or foreign workers.

Fiscal Year in Singapore

1 January - 31 December is the 12-month accounting period that businesses in Singapore use for financial and tax reporting purposes.

Payroll Cycle in Singapore

The payroll cycle in Singapore is usually monthly, with employees being paid within 7 days after the end of salary period.

Minimum Wage in Singapore

Singapore does not have a universal national minimum wage. Instead, the country employs the Progressive Wage Model (PWM), which sets minimum wage standards for specific sectors and occupations. The PWM aims to uplift lower-wage workers through skills upgrading. Key sectors covered include:

The Ministry of Manpower (MOM) publishes detailed rates per sector here.

Besides the PWM, Singapore also sets a Local Qualifying Salary (LQS)L, the minimum salary threshold which determines whether a Singaporean citizen or permanent resident employee can be counted towards an employer’s local workforce for the purpose of hiring foreign workers. The LQS is set at S$1,600 per month for full-time local employees working 35–44 hours per week.

Bonus Payments in Singapore

In Singapore, although not mandatory, it is customary to provide 13-month bonuses equivalent to one month's salary at the end of the year.

‍

How is Payroll Calculated in Singapore?

Payroll in Singapore includes gross salary plus any allowances, bonuses, or overtime. From this, you deduct employee CPF, SDL, any self-help group contributions, and income tax if applicable. Employers must also add their share of CPF contributions, SDL, and possibly the Foreign Worker Levy on top. Accurate attendance and wage records are essential for calculating monthly dues and CPF ceiling limits.

Types of Payroll Taxes in Singapore

Singapore’s payroll landscape involves several distinct tax components, each governed by specific rules and deadlines:

Employer CPF Contributions

Singapore’s social security is administered through compulsory CPF contributions, payable by both employer and employee for citizens and permanent residents. For employees aged 55 and below, employers contribute 17%, while employees contribute 20%, with contributions capped at monthly wages of SGD 7,400 in 2025.

Skills Development Levy (SDL)

SDL supports workforce training programs. It is levied at a flat 0.25% of monthly wages, with a minimum of SGD 2 and a maximum of SGD 11.25 per employee. Payments are due monthly and submitted along with CPF contributions.

Foreign Worker Levy (FWL)

This applies to employers hiring foreign workers. The rate depends on the industry, the qualification of the worker, and the ratio of foreign to local staff. It is separate from CPF and SDL and must be paid monthly.

Income Tax Withholding

Regular salary income is not subject to withholding. However, lump-sum payments like bonuses or end-of-service gratuities may require tax clearance via IR21 or IR8A forms, submitted through the IRAS myTax Portal.

How to Set Up a Payroll in Singapore?

Registering with Singapore Authorities

Register your company with the CPF Board to obtain an employer account. You can also register for SDL and applicable levies through the same platform.

Choosing a Payroll System

Select a payroll software or provider to manage submissions and compliance effectively. Options include:

 
• Playroll
 
• Xero
 
• Sage
 
• QuickBooks

These solutions integrate with CPF and IRAS systems, simplifying payroll runs and compliance tracking.

Onboarding Employees for Payroll

Collect employee details such as identification, bank account information, tax residency status, and CPF declaration. Enter this into your payroll system along with employment terms like pay frequency, allowances, and work hours.

Step-by-Step Payroll Processing in Singapore

Collecting Timesheets and Attendance Data

Use digital systems or manual timesheets to capture employee attendance accurately. This data is critical to ensure accurate salary, overtime, and CPF calculations.

Calculating Salaries and Deductions

Start with gross wages and deduct:

 
• Employee CPF (20%, if aged ≤55)
 
• SDL (0.25%)
 
• Foreign Worker Levy, if applicable

Then add employer contributions for CPF (17%), SDL, and any applicable levies. Ensure you comply with CPF ceilings and age-based rates.

Generating and Distributing Payslips

Create itemized payslips showing gross pay, all deductions, employer contributions, and net salary. Distribute electronically or in printed form during each pay cycle.

Submitting Payroll to Authorities

Submit CPF, SDL, and levy payments through CPF EZPay or CPF Online by the 14th of the following month. Delays may result in penalties.

Paying Employees

Pay employees via bank transfer or cheque according to your payroll schedule—typically the last working day of the month. Ensure all deductions and contributions are completed prior to payment.

How to Submit Payroll Tax in Singapore

 
• CPF and levies: Submit via CPF EZPay or CPF Online by the 14th of the following month.
 
• IR21 / IR8A forms: File these through IRAS myTax Portal for end-of-service payments, usually before payout or CPF submission.

Payroll Tax Due Dates in Singapore

Payroll Contributions in Singapore

Understanding the tax obligations for both employers and employees is crucial when operating in Singapore's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Singapore.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 17.25% - 32.25% on top of the employee salary in Singapore.

Employee Payroll Tax Contributions

In Singapore , the typical estimation for employee payroll contributions cost is around 20%.

Individual Income Tax Contributions

The computation of income tax in Singapore follows a progressive rate system, with factors such as household status and the number of children potentially influencing the overall tax rates.

Pension in Singapore

In Singapore, the minimum retirement age is 63, extending to reemployment until age 68. By 2030, these ages will be raised to 65 and 70. The Central Provident Fund (CPF) is the main government-mandated pension system. At 55, employees are eligible to receive the savings as a lump sum, and at 65, they may withdraw up to 20% or choose monthly payouts.

Ready for Payroll That Fits Your Workflow?

Make better business decisions by consolidating global payroll data, while seamlessly syncing your existing payroll operations.

• Instantly integrate outsourced and in-house payroll.
• Interactive variance analysis to prevent errors.
• Create custom reports and access in-depth analytics.

Book a Demo

Managing Common Payroll Challenges in Singapore

Global employers operating in Singapore often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in Singapore.

Maintaining Accurate and Detailed Payroll Reports

Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date – including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.

Keeping Up With Ever-Changing Tax Laws & Compliance Laws

In Singapore, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.

Consolidating Multi-Vendor Payroll Analytics

Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.

Integrating Multiple HR & Payroll Systems

Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.

Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.

What Does a Global Payroll Management Platform Cover?

A global payroll management platform is a software solution designed to streamline and automate the payroll processes for organizations with employees across multiple countries. It helps ensure accurate and timely payment while maintaining compliance with legal and regulatory requirements in Singapore.

Key functions of a payroll management platform can include:

• Consolidate payroll data: Streamline fragmented payroll data into one source of truth when you’re operating in multiple regions.
   
• Analytics and reporting: Advanced capabilities to analyze payroll data and generate automated reports per region.
   
• Monitor and standardize payroll: Get an accurate view of employee costs, bonuses, and taxes per region, catch variances, and standardize payroll processes across regions to minimize errors.
   
• Compliance and record-keeping: Maintains accurate payroll records and ensures adherence to labor laws and regulations, reducing the risk of legal issues.
   
• Employee self-service: Provides portals where employees can access pay stubs, update personal information, and manage benefits selections.

How Playroll Can Streamline Payroll & Taxes in Singapore

Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:

• Multi-Vendor Integration: Our platform syncs seamlessly with your providers and in-house systems to unify global payroll services in one platform.
   
• Standardize Payroll Processes: Unify your operations in one dashboard to ensure payroll is running smoothly globally, with advanced approval flows and reports.
   
• Improve Governance & Compliance: Improve compliance by centralizing all your compliance tasks and processes. Easily track your payment obligations, with digitized audit trails.
   
• Advanced Reporting: Access and configure your data, your way, with a comprehensive suite of payroll analytics and reporting tools.