Singapore’s taxation system consists of taxes imposed to companies and individuals. Singapore employees are paid by the companies they work for which are required to use payroll management systems in order to compute the taxes related to employees’ salaries. The HR department is usually in charge with administering the payroll system. However, in the last few years many companies in Singapore request the services of outsourcing companies in order to manage their HR department. For personalized accounting services you can also refer to our specialists in company formation in Singapore.
Both Singapore companies and employees are subject to several contributions. Payroll management implies the calculation and payment of these contributions. These mandatory payments are related to:
The contributions to the Central Provident Fund (CPF) are levied based on the rates provided by the Fund’s authority. Employers and employees are taxed in accordance with the wages classification which is made up of ordinary wages and additional wages. The maximum cap for the CPF contributions is a monthly salary of 5,000 SGD. The Ethnic Fund levy applies only to employees belonging to a certain ethnic group. The foreign employees and the skill development levies are applied to Singapore employers only.
If you want to open a company in Singapore and need details about contributions to be paid as part of the payroll you can refer to our local agents.
Payroll management in Singapore implies certain reporting requirements applied to employers. Singapore companies with more than 15 employees are required to submit information about their workers’ wages with the Inland Revenue Services in Singapore (IRAS).
Singapore companies hiring foreign citizens are also required to notify the IRAS about these employees and obtain tax clearances on their behalf. Employers are also required to store records of their employees’ wages for at least 5 years.
For information related to all payments to be made when administering the payroll system you can contact our Singapore consultants in company registration.