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Taxes

Employer Contributions

Income tax is not withheld with payroll in Singapore. Therefore, it is the employee's responsibility to file their annual tax declaration and pay directly to the Inland Revenue Department.

Central provident fund (CPF)

Employers must make monthly CPF contributions for all employees who are Singapore citizens or Permanent Residents (employees working overseas do not qualify for the contribution). CPF contributions fund social benefits, such as retirement, healthcare, homeownership and family protection.

Employee's age group and salary determine CPF contribution rates. Contributions for 1st and 2nd-year Permanent Residents are at graduated rates.

CPF contributions are due for basic wages, overtime pay, cash incentives, allowances, commissions and bonuses. Reimbursements, termination benefits and gifts in kind do not require a CPF contribution.

Monthly contributions get separated into three different accounts through CPF:

  1. Ordinary account - used for home purchase, paying for CPF insurance, investments and education

  2. Special account - used for old age and investment in retirement-related financial products
  3. MediSave account - personal or family hospitalization expenses and approved medical insurance
    1. MediShield Life – a scheme that covers high hospital bills as well as outpatient treatments
    2. Private Medical Insurance Scheme – members can purchase an Integrated Shield Plan for additional insurance for themselves and their dependents
    3. ElderShield – Severe disability scheme for long term care, usually used for the elderly.
 

Employers contribute 17% of employees' salary for employees aged 55 or below, 13% for employees aged 55-60, 9% for employees aged 60-65, and 7.5% for employees over the age of 65. Subject to a monthly ordinary wage ceiling of SGD 6,000 and a total annual wage ceiling of SGD 102,000.

Skills development fund (SDF)

The SDF provides training grants under the National Continuing Education Training system and supports workforce upgrade programs. Employers contribute 0.25% of employee's gross monthly salary, capped at SGD 11.25 monthly.

Foreign worker levy (FWL)

Employers who hire foreign employees with Work Permits or S Passes pay monthly levies. The amount is determined by the worker's qualification, the company's sector, and the foreign to residential workers ratio. Employees on Employment Pass, earning SGD 3,000 or more monthly, are exempt from FWL.

 

Employee Contributions

Individuals are taxed only on income earned in Singapore and are considered tax residents in a particular year if they are:

  • Singapore Citizens (SC) or Singapore Permanent Residents (SPR) who reside in the country, except for temporary absences
  • Foreigners who either live in Singapore or are employed there (other than a company director) for 183 days or more
  • An expatriate who stays in Singapore for a consecutive period spanning three calendar years (not necessarily three full calendar years)

Income tax

Income tax rates depend on an individual’s tax residency status. The taxes are progressive for resident taxpayers, with the highest personal income tax rate at 22%.

Non-residents are taxed at a flat rate of 22% (employment income is taxed at the higher number of either a flat rate of 15% or at the resident rates with personal allowances).

Any salary used for relevant employment expenses, charitable donations, and relief funding such as course fees, exempts income tax.

Married couples file taxes separately. 

Taxable Income (SGD) Income Tax Rate
Below 20,000 0%
20,001 - 30,000 2%
30,001 - 40,000 3.5%
40,001 - 80,000 7%
80,001 - 120,000 11.5%
120,001 - 160,000 15%
160,001 - 200,000 18%
200,001 - 240,000 19%
240,001 - 280,000 19.5%
280,001 - 320,000 20%
Over 320,000 22%

Central provident fund (CPF)

  • Only Singapore citizens and permanent residents contribute to the CPF, which funds the national pension scheme, social benefits, healthcare, homeownership and family protection. Foreigners cannot make voluntary contributions to the CPF.

Employees aged 55 or below have to contribute 20% of their ordinary monthly wages (basic wages, overtime pay, cash incentives, allowances, commissions and bonuses), employees age 55-60 contribute 13%, employees aged 60-65 contribute 7.5% and employees aged 65 and over contribute 5%. The contributions are subject to a monthly ordinary wage ceiling of SGD 6,000 and a total annual wage ceiling of SGD 102,000.

Supplementary retirement scheme (SRS)

The SRS is a voluntary scheme created to encourages employees to save for retirement beyond their CPF savings. The maximum amount they can contribute is subject to an income cap of SGD 102,000. Employers can make contributions to their employees’ SRS accounts, which are capped at 15% for Singapore citizens or permanent residents and 35% for foreigners. Employees are taxed on these employer contributions but will be allowed a corresponding tax relief.

Ethnic fund

This is an optional monthly contribution based on an employee’s ethnic group. The fund goes to the relevant ethnic group welfare, and the amount deducted from the employee’s salary depends on their income level. The ethnic funds available are:

  • Eurasian community fund (ECF) - for all Eurasian-Singapore citizens and Singapore permanent residents
  • Singapore Indian development association (SINDA) fund - for Singapore citizens and Singapore permanent residents
  • Mosque building and mendaki fund (MBMF) - for Singapore citizens, Singapore permanent residents, and foreign workers who are Muslim.
  • Chinese development assistance council (CDAC) fund - for Singapore citizens and Singapore permanent residents of Chinese descent.Chinese development assistance council (CDAC) fund -  for Singapore citizens and SPR of Chinese descent.

 

Tax-Free Allowance

Personal relief and tax rebates are granted only to resident individuals.

Employment expenses

Employment expenses are tax-deductible only if they were made wholly and exclusively in the activity generating the income in Singapore. The employee must have incurred these expenses in carrying out their official duties, and cannot:

  • have been reimbursed by the employer
  • be of a capital or private nature
  • be incurred on public transport

Personal deductions

Charitable contributions

Generally, individuals can claim a 250% deduction for qualifying donations to approved charities, foundations, and grantmakers.

Life insurance premiums

Life insurance premiums are tax-deductible but subject to certain conditions. The total deduction is capped at SGD 5,000.

Mortgage deduction

An interest expense may be deductible, provided it is incurred wholly and exclusively in taxable income production. Mortgage interest is, therefore, deductible only if the property brings income.

Subscription fees

Employees can deduct annual subscriptions they have paid to professional institutes or societies if employment requires membership. Subscriptions to such professional organisations that are not required, however, are relevant to their employment duties provide may also be deductible.

Pension contributions

Singapore citizens and permanent residents can claim CPF or an approved pension or provident fund contributions against their taxable income. They are, however, subject to limits prescribed in the CPF Act.

Employees can claim deductions for SRS contributions, which are capped at 15% of income for Singapore citizens and permanent residents and 35% of income for foreigners (capped at SGD 35,700). The claim is against the income earned in the year they made the contributions, subject to income capping rules.

Personal reliefs

Personal income tax reliefs are subject to a cap of SGD 80,000 per year of assessment. Residents can claim deduction on the following reliefs:

Spouse relief

SGD 2,000 if the spouse is living with or supported by the taxpayer and their annual worldwide income is not more than SGD 4,000.

Disabled spouse relief

SGD 5,500 for taking care of a disabled spouse. No income threshold applies for this relief.

Earned income relief

The lesser of either actual earned income or SGD 1,000 for employees aged 55 or less. The relief is increased for individuals 55 and older or are disabled.

Qualifying child relief

SGD 4,000 for each child under 16 years or in full-time education, as long as their annual worldwide income is less than SGD 4,000.

Disabled child

If the child is disabled, the parent is entitled to an SGD 7,500 instead of the SGD 4,000 qualifying child relief. No income threshold applies for this relief.

Working mother's child relief

This relief is granted for each Singaporean child who satisfies all conditions under the qualifying child relief or disabled child relief. It is a percentage of the mother's earned income, subject to a cumulative maximum of 100% of her earned income. The rates applicable for the first, second, and each subsequent child are 15%, 20%, and 25%, respectively.

 

Aged dependent relief

  • An ageing parent or grandparent maintained by the taxpayer in Singapore: SGD 5,500
  • Ageing parent or grandparent maintained and living with the taxpayer in Singapore: SGD 9,000
  • A disabled ageing parent or grandparent maintained by the taxpayer in Singapore: SGD 10,000
  • Disabled ageing parent or grandparent maintained and living with the taxpayer in Singapore: SGD 14,000

The relief for aged parents and grandparents is subject to the dependent's worldwide income not exceeding SGD 4,000. There is no qualifying income threshold for disabled, ageing parents and grandparents.

Grandparent caregiver relief

An SGD 3,000 relief is given to working mothers who get help from parents, grandparents, parents-in-law or grandparents-in-law to take care of their children. This applies if the children are under 12, however, if the children are disabled and unmarried, there is no age cap as of 2020. This relief is on top of the aged dependent relief (above).

Educational expenses

Individuals can claim up to SGD 5,500 for course fees, including tuition and examination fees. They need to be for approved academic, professional, or vocational qualifications. The individual has up to two years after they have completed the course to claim the relief.

Reservists

Individuals who have completed or performed national service are entitled to SGD 1,500 or SGD 3,000 relief. Key appointment holders get an additional relief of SGD 2,000. A relief of SGD 750 against their income is given to Singaporean parents, who do not qualify for national service relief and reservists' wives.

CPF cash top-up relief

The relief is the lesser of either SGD 7,000 per year or the top-up cash amount to the CPF retirement account made by the taxpayer or the employer. Individuals can claim a further SGD 7,000 relief for top-ups they have made to the accounts of their siblings, parents, parents-in-law, grandparents, grandparents-in-law, and spouse. The taxpayer's siblings and spouse must have an income less than SGD 4,000 to qualify. In addition, individuals who make voluntary contributions to their own CPF healthcare accounts (Medisave) will be allowed tax relief up to a cap of SGD 37,740 minus mandatory contributions for the year.

Tax rebate

Parenthood

Rebates against either one or both parents' tax liability of SGD 5,000, SGD 10,000, and SGD 20,000 are available for the first, second, and subsequent Singaporean children.

Personal

The personal tax rebate is capped at SGD 200.

Charitable contributions

Individuals can claim deductions for donations only if they made them to an approved recipient in cash or another acceptable form. The qualifying donations deduction is typically 250% of its value.

  • Businesses who send employees to volunteer and provide services to approved charitable institutions between July 1, 2016, and December 31, 2021, can deduct 250% of the wages and incidental expenses incurred, subject to certain conditions.
 
 
 
This page was last updated on 26th January, 2021. If you have questions about this page, send us an email.