Singapore Remittance Considerations for International Businesses

Singapore Remittance Considerations for International Businesses

With its high-income population and nearly top-ranked ease of doing business status from The World Bank, Singapore is an ideal location for companies seeking a new target for their multinational operations. The country has a number of benefits for international businesses such as a relatively low corporate tax rate at 17%, plenty of available grants and seed money, high English-speaking population, and lots of multinational businesses that are interested in increasing innovation. If the country is on your radar, you’ll want to gain a general understanding of Singapore remittance and start understanding your Singapore payroll requirements.

In addition to the basics of payroll and remittance, you’ll also need to familiarize yourself with Singapore Corporate Access (or CorpPass), which is a new development that impacts all employers in the country. CorpPass is a one-stop authentication and authorization service, for corporate users to transact with government agencies online on behalf of their organizations. You can learn more about this requirement in this post. And, in addition to payroll, you should also gain a general awareness of the quirky laws in the country that will affect your entire in-country team. For example, if you’re caught using someone else’s Wifi, you can be fined up to $10,000, face up to three years in jail, or both.

There is also a nuance for businesses with operations in China, or expats working in both Singapore and China. The Singapore Dollar and the Chinese Yuan (also known as the RMB) began direct trading in 2014, which makes it easier for companies in Singapore to do business with their Chinese counterparts. Learn more about that here.

For a deeper understanding of the basics of Singapore remittance, continue reading below.

Singapore Remittance Consideration #1: Paying Employees

Methods of payment for employees in Singapore, as in a majority of international markets, are established by local labor laws. Whether you’re managing your payroll in-house or working with a global payroll provider, you’ll need to have a basic understanding of Singapore remittance requirements to ensure your company remains compliant.

Basic requirements for payroll regulations in Singapore include:

• Employers must pay established wages to workers during their statutory holidays, maternity, and holiday leave

• There is no minimum wage established in the country, but your company should establish a fair working wage for your open positions to remain competitive

• Employers must pay employees through an established company, which can one of the following: Sole Proprietorship, Partnership, Company, Limited Liability Partnership, or Limited Partnership

In addition, your company must have a local bank account and documentation submitted with regulating organizations to have the correct entitlements withheld from your team members.

Contributions to CPF

While there is no official social security scheme, Singapore remittance does include contributions to the Central Provident Fund (CPF), a compulsory national savings scheme that is established by the Central Provident Fund Act. Do note, foreign nationals cannot become members of the CPF. Every employer in Singapore is responsible for making contributions to its employees’ CPF accounts at the contribution rates prescribed by the CPF Act. The contribution rates vary depending on factors such as the employee’s age and salary and range between 12.5% and 37%. The wages to which the contribution rates apply are currently subject to a monthly ceiling of S$6,000 and an annual ceiling of S$102,000.

Income Tax

An additional factor in Singapore remittance is income tax. The prevailing employment income tax rate for every dollar of income for tax residents is as follows:

• On the first S$20,000: 0%

• For the next S$10,000: 2%

• For the next S$10,000: 3.5%

• For the next S$40,000: 7%

• For the next S$40,000: 11.5%

• For the next S$40,000: 15%

• For the next S$40,000: 18%

• For the next S$40,000: 19%

• For the next S$40,000: 19.5%

• For the next S$40,000: 20%

• For every dollar exceeding S$320,000: 22%

For non-residents or expats, the employment income tax rate is either 15% or the progressive rate for tax residents, whichever is higher.

As the employer, it’s your responsibility to remit the proper tax amounts from your employees’ payroll. This is another area in which working directly with a global payroll provider can help your organization manage compliance.

Singapore Remittance Consideration #2: Transferring Funds To and From the Country

Compared to other Asian countries, such as China, transferring money to and from Singapore is relatively easy. Your company can either rely on your financial institution in Singapore to transfer funds to your local bank or use one of the many wire transfer services available for international funds.

Be sure to work with an expert in foreign currency, such as a single fund payroll provider, to ensure that your funds are transferred accurately and that your international team members get their payments on time and error free.

 


 

Contact Celergo to explore the ways we can help you to save on payroll costs, global treasury management headaches, or just need help maintaining compliance on the global scale. Thank you for your attention!

 

**This article is for informational purposes only. It is not intended to constitute legal advice.

TOPIC: Blog

Global Terminations Process For Employees Of Multinational Companies
3 Employee Self-Service Trends In International Payroll For 2018