Singapore, as you may know, is one of the few countries that does not have a minimum wage. If your company is more than a one-man show, this article will teach you everything you need to know about payroll management or how to calculate payroll in Singapore.
Before you go calculating local or foreign workers’ payroll in Singapore, know all the requirements in detail.
Overview of Payroll requirements
- An employer is not required to withdraw payroll taxes in Singapore from an employee’s wage on a monthly basis, which means that employees are responsible for paying their own taxes. Employers, on the other hand, are required to give employees their salary back.
- Personal income tax in Singapore ranges from 0% to 22%, with the highest tax level applicable to incomes above SGD 320,000. This is only applicable to Singaporeans.
- Singapore’s “Not Ordinarily Resident” plan provides tax reductions to certain individuals who do not work in the country for the entire year. Before becoming a Singapore tax resident, an individual must first meet non-Singapore tax resident requirements for three years. They must also work for a Singapore-based company, earn at least SGD 160,000 per year, and spend more than 90 days of the year outside of Singapore on business.
- The Area Representative Scheme, which apportions time spent working in Singapore to the amount of tax paid, can also provide tax savings or even a complete exemption to eligible persons.
- Employees who have worked for their employers in Singapore for at least three months are eligible for paid annual leave.
- The amount of yearly leaves an employee is entitled to be proportional to the amount of service they have provided to their company. This might be anything from 7 days for a year of service to 14 days for an employee who has worked for the company for more than eight years.
- Fathers who have been married to the mother of their child from conception to birth are eligible for two weeks of government-paid paternity leave. The father must have worked for their employer for at least 3 months before the birth of their child and the child must be a Singaporean citizen.
- Please visit the Ministry of Manpower’s website to learn more about leave eligibility.
- The Central Provident Fund is Singapore’s social security system.
- Employees must pay into the Fund in order for it to help them with housing, healthcare, and other expenditures after they retire.
- The Fund is open to Singaporeans and permanent residents.
- The amount that each employee must contribute to the Fund is determined by their monthly income.
- Additional social funds are also available to help underserved populations. The Chinese Development Assistance Council, the Mosque Building and Mendaki Fund, the Eurasian Community Fund, and the Singapore Indian Development Association are among the organizations named.
- Employees must be provided with itemized pay stubs that show their salary, allowances, overtime, and any deductions. The payslip should also indicate the wage period and payment date. Payslips can be printed on paper or electronically.
- Companies in Singapore with six or more employees must file Form IR8A on behalf of their employees by March 1st of each year to disclose the previous year’s salary.
- For processing payroll in Singapore, employers are required to keep salary records for each employee for a minimum of two years. These documents must be kept for up to one year after the employee has left the organization.
Bottom Line
Singapore payroll management may take more time and effort as your company expands and your employee profile becomes more sophisticated. If you’re one of the small businesses to mid-sized businesses with less than 25 employees, payroll software in Singapore may be more cost-effective and less stressful than having to perform this function in-house. Get in touch with our team of DHRP to get started.