With its central location in Southeast Asia and its status as a financial and commercial hub, Singapore is a great place to expand your company. The World Bank named Singapore the second easiest country in the world in which to do business. However, it’s critical to understand the country’s various employment laws, taxation rules, and how to stay compliant when setting up payroll.
Taxation rules in Singapore
Singapore operates under the Central Provident Fund (CPF), its nationally mandated benefit or social security program. You should budget around 17% of your employees’ salaries as a cost paid to the CPF by the employer.
Taxation and other enterprise disbursements are administered by the Inland Revenue Authority of Singapore, which has instituted a progressive tax rate that ranges from 0% to 22%. Singapore does not have payroll withholding. The taxes your employees pay will depend on their salary, but they will only get taxed on the income they earn in the country. As an employer, you’ll use Form IR8A and Appendix 8A, Appendix 8B, or Form IR8S to prepare an annual wage report by March 1.
Singapore payroll options for companies
Before you set up payroll in Singapore, you’ll need to learn about the different available payroll options:
- You can pay employees yourself through your parent company. However, you will need to establish a subsidiary in Singapore before you can officially hire and pay an employee.
- If you set up a subsidiary but don’t have the means to administer payroll, you can look into Singapore payroll outsourcing. While the outsourcing company can manage compensation, you are still responsible for making sure you stay compliant with all payroll regulations and overall employment compliance.
- You can also choose to streamline global payroll management with a Global Growth Platform™ such as G-P’s. We ensure your employees are paid on time and accurately – in full compliance with local laws – so you can focus your time and resources on other areas of your global growth.
How to set up a payroll in Singapore
Before setting up Singapore payroll, you have to establish an entity or subsidiary.
Entitlement and termination terms
You need to establish certain entitlement and termination terms with any Singapore-based employee. Both should be included in the employment contract that should be created and signed before your employee’s first day. The notice period for termination ranges by the length of a worker’s service. It is common practice for 1 month’s termination notice to be provided. However, if the notice period is not specified in the employment contract, the following periods apply:
If you are handling the employment and payroll yourself, consult with someone well-versed in Singapore employment law to make sure all aspects of entitlement and termination are compliant.
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