Singapore is a city-state, one of only three in the world, the other two being Monaco and Vatican City. The name means “Lion City” in Sanskrit and one sees lion images throughout the islands even though lions have never been indigenous here. Legend has it that a Sumatran prince named the islands when he thought he spotted a lion but most likely it was actually a tiger that he saw. Colonial Singapore became a trading post of the British East India Company in the 19th century and was eventually ceded to Britain. It gained independence in 1963 by joining with other British territories to form Malaysia. Two years later, it became its own sovereign nation, celebrating its 50th Anniversary in 2015.
During this time, Singapore has transformed itself into a hub for global commerce, finance, and transport. It is one of the smallest countries in the world, yet has a population of about six million, and continues to rapidly grow. Most people live in public housing towers, with some apartments selling for more than one million USD. The cost of living is high and rules are strict.
There are four official languages in Singapore – English, Mandarin, Malay, and Tamil – reflecting the diverse ethnic makeup of the city.
While payroll in Singapore is not overly complex, there are a number of different types of deductions described below. The administration process of these deductions demands that employers pay close attention to processes for onboarding and paying employees. Here is a Singapore payroll overview:
Registration is required for any business, including foreign branch offices and representative offices. The authorities make this a smooth and easy process.
The Central Provident Fund (CPF) is a mandatory social security savings scheme funded by contributions from employers and employees. Employers are required to make CPF contributions at the monthly rates stated in the CPF Act. The employer must make payment on both the employer’s and employee’s share of the monthly CPF contribution. Employee shares of the contribution can be deducted from their wages. CPF contributions are due at the end of the month, with a grace period of 14 days.
CPF contributions must be made for employees who are Singapore citizens or Singapore permanent residents (SPRs). This includes any Singaporean who is employed under a contract of service or other agreement entered into in Singapore.
The following employees are also eligible for CPF contributions:
• Company directors.
• Part-time or casual employees.
• Family members of the business owner, if they are receiving wages for work done for the owner.
• Employees concurrently employed by another employer.
Work Permit holders will come under the CPF scheme if they become Singapore permanent residents. This takes effect from the day holders are granted permanent residency.
There are additional payroll contributions for CDAC, ECF, MBMF, and SINDA. These are known as Self-Help Group (SHG) funds. These funds are targeted at helping the less privileged and low-income households in the specific community targeted by each fund. Employees are required to make monthly contributions to these SHG funds, depending on their race or religion. These monthly contributions are typically deducted automatically from employees’ wages. Contributions are not mandatory to SHG funds. Should an employee wish to contribute a different amount or opt-out, they will have to fill out and file the relevant forms from the respective SHGs.
The CDAC is a self-help group targeted at less-successful individuals in Singapore’s large Chinese community. With effect from 1 September 1992, all employees belonging to the Chinese community who are Singapore Citizens and Singapore Permanent Residents need to make monthly contributions to the CDAC Fund according to their individual wage level.
The ECF was established by the Eurasian Association, a self-help community organization supported by the Singapore government. “Eurasian” is noted on the person’s identity card if they are a person of both European and Asian ancestry. All employees belonging to the Eurasian community who are Singapore Citizens and Singapore Permanent Residents need to contribute monthly to the ECF.
The MBMF helps build and upgrade the mosques in Singapore, supporting their religious programs and providing assistance to Muslim families. All working Muslims who are Singapore Citizens, Singapore permanent residents, and foreign employees need to contribute to the MBMF.
SINDA, formed in August 1991, is a self-help group that works to uplift the Singapore Indian Community. These funds go towards raising the academic level of Indian students and also offer a range of programs and services to help families that require assistance. All employees belonging to the India Community, except those on the Foreign Worker Levy (FWL) scheme, need to contribute monthly.
Income tax is filed on an annual basis to the Inland Revenue Authority of Singapore. The deadline is by March 1st of the following year.
These occur hen a male employee receives a notice from the military to attend training. The company is able to make a claim for the employee’s salary for the time that he is away on military training. This is due to the National Service Centre within 3 weeks after the end of the training period
This kicks in when an eligible employee takes government paid leave such as Maternity, Paternity, Child Care, or Adoption Leave. It is due to the Ministry of Social and Family Development within 3 months of the last day of leave taken.
The above facts just scratch the surface of Singapore Payroll. If you would like to obtain further information on Singapore payroll or any one of the 150+ countries that Celergo covers, please contact us. We even have a phenomenal Singapore Service Center dedicated to excellence!