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Singapore Key Industries, Incorporating, Employment, Payroll & Tax, and Immigration

May 23, 2017by jump_admin0

Singapore Key Industries

Singapore is ranked second in 2016 World Bank’s ease of doing business ranking.

 Infrastructure Hub, Logistics and Supply Chain Industry Capabilities

  • Strategic location in the heart of Asia
  • Business-friendly customs and import/export procedures
  • Expertise in project development, structuring and financing
  • Ranked fifth in the 2016 Logistics Performance Index across 160 countries

Manufacturing Industry Capabilities

  • Dedicated to quality and innovation
  • Adoption of international manufacturing standards
  • Established global network of production facilities

Consumer Electronics Industry Capabilities

  • Pool of qualified local and global talent
  • Government’s heavy investment in Research and Development
  • Ranked fourth globally and top in Asia for best Intellectual Property (IP) protection in 2016-2017 World Economic Forum’s Global Competitiveness Report

Incorporating in Singapore

 Types of entities

  • Sole-Proprietorship is a business owned by one person.
  • A partnership consists of more than 2 partners, up to 20 partners.
  • A Limited Partnership (LP) consists of more than 2 partners and no maximum limit, with at least one general partner and one limited partner.
  • A Limited Liability Partnership (LLP) consists of more than 2 partners and no maximum limit, where the partners have limited liability.
  • A Company is a separate legal entity where members have limited liability.
    • An Exempt Private Company consists of 20 members and below, where no corporation holds beneficial interest in the company’s shares.
    • A Private Company consists of 50 members and below.
    • A Public Company has more than 50 members.

 Registering a Local Company

  1. Gain approval of the company’s name
  2. Submit an application online via the Accounting and Corporate Regulatory Authority (ACRA)’s electronic filing and information retrieval system – BizFile+, using SingPass or CorpPass
  3. Otherwise, the services of a registered filing agent such as a law or accounting firm can be engaged to submit the application.

Registering a Foreign Company

  1. Gain approval of the company’s name
  2. Register the foreign company in Singapore via BizFile+. There must be at least one authorised representative – a Singapore Citizen, Singapore Permanent Resident or an EntrePass holder usually residing in Singapore.
  3. Otherwise, the services of a registered filing agent such as a law or accounting firm can be engaged to submit the application.

Employment Regulations

The Ministry of Manpower (MOM)’s Employment Act regulates Singapore’s employment, covering all local and foreign employees, with a few exceptions. Within 14 days from the employee’s start date, employers must issue the required key employment terms. Employers need to provide itemised pay slips stating the breakdown of the salary components within three working days from or upon salary payment. These pay slips and employee records are required to be kept by the employer.

Either the employer or employee can terminate an employment contract. If the contract specifies a notice period, it is mandatory to give notice to the other party in writing or pay compensation in lieu of notice. In absence of the notice period in the contract, the employment act serves as a guide for the notice period. If there is mutual consent between both parties, the notice can be waived.

Payroll and Tax Regulations 

Social Security Scheme

 Employees’ Central Provident Fund (CPF) applies to employees who are Singapore Citizens (SC) or Singapore Permanent Residents (SPR). CPF requires contributions from both the employer and employee, where the employee’s portion has to be deducted from the employee’s salary.

SHG Funds Scheme

 Employees are required to contribute monthly to the Self-Help Group (SHG) funds, unless the employee opts out. This amount has to be deducted from the employee’s salary.

Group

Fund Type

SCs or SPRs employees in the Chinese community

Chinese Development Assistance Council (CDAC) Fund

SCs or SPRs employees in the Eurasian community

Eurasian Community Fund (ECF)

SCs, SPRs or foreign Muslim employees

Mosque Building and Mendaki Fund (MBMF)

Employees of Indian descent *

Singapore Indian Development Association (SINDA) Fund

 * Excluding those on the Foreign Worker Levy (FWL) scheme

Skills Development Levy

It is mandatory for employers to contribute to the Skills Development Fund (SDF) through the Skills Development Levy (SDL). The SDF would be used to support workforce upgrading programmes and to provide training grants to employers when they send their employees to attend training under the national Continuing Education and Training system. The SDL is payable at a percentage of the employee’s monthly remuneration, with a minimum and maximum cap to the contribution amount per employee’s remuneration. 

Singapore Tax

 The Inland Revenue Authority of Singapore (IRAS) is the main agency for tax collection, among other government agencies. 

Corporate Income Tax

Income accrued in or derived from Singapore, and income received in Singapore from outside Singapore, after deductions is taxable income. As of 2017, the standard Corporate Income Tax (CIT) rate is 17%. IRAS offers partial tax exemption for companies.

Partial Tax Exemption

Chargeable income

% exempted from Tax

Amount exempted from Tax

First $10,000

75%

$7,500

Next $290,000

50%

$145,000

There is also a tax exemption scheme for qualifying new start-up companies, applicable for each of the first three consecutive Years of Assessment (YAs). From the fourth YA onwards, partial tax exemption will apply.

Tax Exemption Scheme for New Start-Up Companies

Chargeable income

% exempted from Tax

Amount exempted from Tax

First $100,000

100%

$100,000

Next $200,000

50%

$100,000

In addition, IRAS offers CIT rebates.

CIT Rebate

Year of Assessment

Corporate Income Tax Rebate

Capped at

2018

20%

$10,000

2017

50%

$25,000

 

Individual Income Tax

Tax resident for a current YA are SCs or SPRs residing in Singapore excluding temporary absences. Foreigners who has stayed / worked in Singapore for 183 days or more in the year before the YA, excluding a company director are also considered tax residents. Resident tax rates are applied progressively. Additionally, resident tax rates will receive 20% individual income tax rebate, capped at $500 for YA 2017.

Resident Tax Rates from YA 2017

Chargeable Income

Rate (%)

Tax ($)

First $20,000 

Next $10,000

0%

2%

$0

$200

First $30,000 

Next $10,000

 

3.50%

$200 

$350

First $40,000 

Next $40,000

 

7%

$550 

$2,800

First $80,000 

Next $40,000

 

11.5%

$3,350

$4,600

Firs t $120,000 

Next $40,000

 

15%

$7,950 

$6,000

First $160,000

Next $40,000

 

18%

$13,950 

$7,200

First $200,000

Next $40,000

 

19%

$21,150 

$7,600

First $240,000 

Next $40,000

 

19.5%

$28,750

$7,800

First $280,000 

Next $40,000

 

20%

$36,550 

$8,000

First $320,000 

In excess of $320,000

 

22%

$44,550

 

Non-residents tax rates for employment income is at a flat rate of 15% or the resident progressive tax rates shown above, whichever results in a higher tax amount. Generally, director’s fees and other income taxes are at the 22% rate for YA 2017.

Other Taxes

  • Goods & Services Tax (GST) is collected by the Singapore Customs, taxed on consumption – including import of goods and services where standard rated supplies are taxed at 7%.
  • Customs & Excise Duties is collected by the Singapore Customs mainly on liquor, motor vehicles, petroleum, and tobacco products.
  • Export duties are not levied on goods exported from Singapore.
  • To regulate the employment of foreign workers in Singapore, a monthly Foreign Worker Levy is imposed for each Work Permit holder employed.
  • Stamp Duty is a tax on dutiable commercial and legal documents relating to stocks, shares and immovable property.
  • Property Tax Rates are progressive on owner-occupied and non-owner occupied residential properties. Non-residential properties such as commercial, industrial buildings and land are taxed at 10% of the annual value.
  • Motor Vehicle Taxes are taxes excluding import duties on motor vehicles to curb car ownership and road congestion.
  • Casino Tax is levied on the casinos’ gross gaming revenue, while Betting Taxes are duties on private lottery, betting and sweepstake.  

Immigration

Work Passes and Permits

Employment Pass (EP)

Who is it for?

  • For professionals, managers and executives possessing the necessary acceptable qualifications, earning at least $3,600 a month

 Requirements

  • Application for the Employment Pass must be made by a Singapore-registered company, which can act as a local sponsor.
  • Under the Fair Consideration Framework, companies may be required to advertise the job opening on the Jobs Bank before applying for EP
  • The employer or employment agent (EA) can submit the EP application online or manually.

 Brief overview of application steps

  1. Obtain a written consent from the candidate to apply for the EP.
  2. Application for the EP has to be filled up and submitted along with the supporting documents either on EP Online or over the counter, where a payment of $70 is required for each application. The online processing takes approximately three weeks while the manual processing takes approximately eight weeks.
  3. After approval, send the pass holder’s copy of the in-principle approval (IPA) letter to the candidate so they can enter Singapore within six months to make a request on EP Online with the supporting documents to get the pass issued.

EntrePass

Who is it for?

  • For foreign entrepreneurs who want to start a business in Singapore and own at least 30% of the shares in the company

 Requirements

  • Business has to be a private limited company registered with the ACRA), with at least $50,000 paid-up-capital in a Singapore-based company bank account.

Brief overview of application steps

  1. Submit an EntrePass Application Form along with supporting documents over the counter, where a payment of $70 administrative fee applies and its processing time takes approximately eight weeks.
    1. If the business has not been registered, an approval-in-principle (AIP) letter will be sent.
    2. Afterwards, register the company with ACRA, then fax or mail supporting documents to MOM’s Work Pass Division within one month from the date of the AIP.
  2. After approval (and business registered – if it was not yet registered), the in-principle approval (IPA) letter will be mailed which allows the applicant to enter Singapore within six months to make a request on EP Online with the supporting documents to get the pass issued.

Personalised Employment Pass (PEP)

Who is it for?

  • For EP holders earning a fixed salary of at least $12,000 per month or foreign professionals earning $18,000 per month

Requirements

  • The PEP holder will not be tied to an employer and can generally hold a job in any sector as long as MOM is notified.
  • To continue holding the PEP, holders must earn at least $144,000 per calendar year and not be unemployed in Singapore for more than six months at any time.

Brief overview of application steps

  1. Submit a Personalised Employment Pass Application Form along with supporting documents over the counter, where a payment of $70 administrative fee applies and its processing time takes approximately eight weeks.
  2. After approval, the in-principle approval (IPA) letter will be mailed which allows the applicant to enter Singapore within six months to make a request on EP Online or over the counter with the supporting documents to get the pass issued.

S Pass

Who is it for?

  • For mid-level skilled foreign employees.

Requirements

  • Applicants must earn at least $2,200 a month, where more experienced workers would require higher salaries to qualify.
  • These applicants should have a degree, diploma or relevant technical certificates as well as possessing appropriate level of relevant work experience.
  • There is a quota and monthly levy for employees on the S Pass.
  • Employers need to maintain medical insurance for S Pass holders.
  • The employer or EA has to submit an application for the pass.

 Brief overview of application steps

  1. Obtain a written consent from the candidate to apply for the S Pass.
  2. Application for the S Pass has to be filled up and submitted along with the supporting documents on EP Online, where a payment of $60 is required for each application and its processing time takes approximately three weeks.
  3. After approval, send the pass holder’s copy of the in-principle approval (IPA) letter to the candidate so they can enter Singapore within six months to make a request on EP Online with the supporting documents to get the pass issued.

Work Permit for Foreign Worker

Who is it for?

  • Semi-skilled foreign workers in the construction, manufacturing, marine, process or services sector is eligible for in Singapore.

Requirements

  • There is a quota and monthly levy for each worker.
  • Employers have to provide medical insurance.
  • The employer or EA has to submit an application for the pass.

Brief overview of application steps

  1. Obtain a written consent from the foreign worker to apply for the Work Permit.
  2. Application for the Work Permit has to be filled up and submitted along with the supporting documents on WP Online, where a payment of $30 is required for each application and its processing time takes approximately one week.
  3. After approval, the in-principle approval (IPA) will allow the foreign worker to enter Singapore.
  4. Before the worker arrives in Singapore, buy a security bond for non-Malaysian workers and buy medical insurance for the worker. Also, complete the Security Bond form.
  5. After the worker arrives in Singapore, register the worker’s residential address on the Online Foreign Workers Address Service (OFWAS), at least an hour before requesting for the pass to be issued.
  6. Within two weeks of the foreign worker’s arrival in Singapore, send the worker for a medical examination by a Singapore-registered doctor.
  7. If the company is a Malaysian or a foreign worker changing employer, the request for the pass has to be made on the date stated in the in-principle approval letter. If the worker is from other sources, the request has to be made after entering Singapore and within two weeks of arrival. The request has to be made on WP Online.

 

 

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Copyright 2019. AYP Group. All rights reserved.

Copyright 2019. AYP Group. All rights reserved.

Copyright 2019. AYP Group. All rights reserved.