Singapore Payroll Guide: CPF, SDL, and FWL Explained (2026)

Singapore payroll involves three mandatory employer contributions. Central Provident Fund (CPF) applies to Singapore citizens and permanent residents at up to 37% combined rate. Skills Development Levy (SDL) applies to all employees at 0.25% of gross wages. Foreign Worker Levy (FWL) applies to S Pass and Work Permit holders at S$300-S$950/month depending on pass type and sector.

What Is CPF and How Does It Work?

The Central Provident Fund (CPF) is Singapore's mandatory social security savings scheme. Employers contribute 17% and employees contribute 20% of ordinary wages for workers aged 55 and below. CPF savings are allocated to three accounts: Ordinary Account (OA) for housing and education, Special Account (SA) for retirement, and MediSave Account (MA) for hospitalization.

CPF applies only to Singapore citizens and permanent residents. Foreign workers (EP, S Pass, WP holders) do not contribute to CPF. PRs in their first year receive graduated rates: Year 1 employer 4%/employee 5%, Year 2 employer 9%/employee 15%, Year 3 onwards full rates. Employers can voluntarily contribute to CPF for PRs at full rates from Year 1.

What Are the CPF Contribution Rates by Age?

CPF rates step down at age milestones. This reduces employer cost for older workers while maintaining savings adequacy. The age determination uses the employee's birthday month: the new rate applies from the month following the birthday. Employers must update payroll systems to apply the correct rate each month.

What Are the CPF Wage Ceilings?

Two ceilings limit CPF contributions. The Ordinary Wage (OW) ceiling is S$6,800/month: wages above S$6,800 are not subject to CPF on the ordinary wage component. The Annual Wage (AW) ceiling limits total wages subject to CPF to S$102,000/year. The AW ceiling formula: S$102,000 minus total OW subject to CPF in the year.

Example: Employee earns S$8,000/month ordinary wage. CPF applies only to S$6,800/month. The employee receives a S$20,000 annual bonus. Total OW subject to CPF: S$6,800 × 12 = S$81,600. AW ceiling: S$102,000 - S$81,600 = S$20,400. The full S$20,000 bonus is subject to CPF since it is below the S$20,400 AW ceiling.

What Is the Skills Development Levy (SDL)?

SDL is a mandatory levy on all employers for each employee. The rate is 0.25% of the employee's gross monthly remuneration. The minimum SDL is S$2 per employee per month. The maximum SDL is S$11.25 per employee per month (capping at S$4,500 gross monthly remuneration). SDL applies to all employees including foreign workers.

SDL funds the Skills Development Fund administered by SkillsFuture Singapore. Employers can access SDL-funded training programs and subsidies. SDL is payable monthly together with CPF contributions through the same submission process.

What Is the Foreign Worker Levy (FWL)?

FWL is payable monthly for each S Pass and Work Permit holder. Tier 2 rates apply when the employer exceeds the base quota for foreign workers. EP holders and ONE Pass holders are not subject to FWL. FWL is due by the 14th of the following month, submitted together with CPF and SDL.

What Are the Payroll Filing Deadlines in Singapore?

Aniday's outsourced payroll service in Singapore (Aniday Outsourced Payroll Singapore) handles all submissions and ensures compliance with every deadline. Aniday's EOR Singapore (Aniday EOR Singapore) includes payroll within the EOR fee.

How Is Income Tax Handled in Singapore Payroll?

Singapore does not have a PAYE (Pay As You Earn) withholding system for tax residents. Employees file and pay their own income tax annually. Employers submit employee earnings information via IR8A by March 1 each year. IRAS assesses tax based on the IR8A data and issues individual tax bills.

Non-resident employees (working less than 183 days in a calendar year) are subject to 15% flat tax or progressive rates, whichever is higher. Employers must withhold tax for departing foreign employees by filing IR21 at least 1 month before the employee's departure. Failure to file IR21 makes the employer personally liable for the employee's tax.

Do employers withhold income tax from salaries in Singapore?

No. Singapore does not have payroll tax withholding for resident employees. Employees file and pay taxes individually. Employers only withhold for departing foreign employees (IR21). Employers must submit IR8A annual earnings reports to IRAS by March 1. This is different from most countries where employers withhold monthly.

What wages are subject to CPF?

CPF applies to total wages including basic salary, overtime pay, allowances, commissions, bonuses, and benefits-in-kind (if convertible to cash). CPF does not apply to: reimbursements, payments-in-kind, gratuities on retirement/retrenchment, or employer CPF contributions. The OW ceiling of S$6,800/month and AW ceiling of S$102,000/year limit the contribution base.

How do I calculate CPF for employees who join or leave mid-month?

For partial-month employment, CPF is calculated on the actual wages earned in that month. If ordinary wages for the partial month are below S$6,800, CPF applies to the full amount. The OW ceiling is not prorated for partial months. Example: Employee joins on the 15th and earns S$3,000 for the month: CPF applies to the full S$3,000.

Is medical insurance mandatory for employers in Singapore?

No. Singapore does not mandate employer-provided medical insurance. MediSave (part of CPF) covers basic hospitalization for citizens and PRs. Employers commonly provide supplementary group health insurance as a benefit (S$100-S$500/employee/month). For Work Permit holders, employers must purchase medical insurance of at least S$15,000/year per worker.

What is the penalty for late CPF payment?

Late CPF payment incurs interest of 1.5% per month for the first month and 18% per annum thereafter. CPF Board can impose a composition penalty. Repeated late payments or deliberate non-payment may result in prosecution: fines up to S$5,000 and/or imprisonment up to 6 months per charge. Directors can be held personally liable.

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