Running payroll in Singapore is more than calculating gross-to-net. Employers must contribute to the Central Provident Fund (CPF), withhold and remit foreign worker levies where applicable, contribute the Skills Development Levy (SDL), deduct authorised donations, and file annual tax returns under the Auto-Inclusion Scheme (AIS). Getting any of this wrong attracts penalties under the CPF Act 1953, the Employment Act 1968, and the Income Tax Act 1947.
This guide consolidates the 2026 rules, rates and deadlines a Singapore employer needs to know.
What Counts as “Wages” for CPF
The CPF Act defines wages broadly. It includes basic salary, overtime, commissions, allowances, bonuses, tips and any cash payment to an employee. It excludes reimbursements for genuine business expenses, gifts in kind, retrenchment benefits, and certain ex-gratia payments.
Wages are split into Ordinary Wages (OW) — paid for work performed in the calendar month — and Additional Wages (AW) — typically bonuses and irregular payments. Each has its own CPF cap.
CPF Rates for 2026
For Singapore Citizens and PRs from their 3rd year of PR status (the headline rates), the 2026 contribution rates by age band are:
| Age band | Employer (%) | Employee (%) | Total (%) |
|---|---|---|---|
| 55 and below | 17.0 | 20.0 | 37.0 |
| Above 55 to 60 | 15.5 | 17.0 | 32.5 |
| Above 60 to 65 | 12.0 | 11.5 | 23.5 |
| Above 65 to 70 | 9.0 | 7.5 | 16.5 |
| Above 70 | 7.5 | 5.0 | 12.5 |
Note: rates for workers aged 55 to 65 have been progressively increasing under Singapore’s senior worker package — confirm the year-specific rates on CPF’s website before each payroll cycle.
Ordinary Wage Ceiling 2026: S$7,400 per month (set to step up to S$8,000 from 1 January 2026). Additional Wage Ceiling: S$102,000 minus the year’s OW subject to CPF.
For PRs in years 1 and 2 of PR status, lower graduated rates apply unless the employer and employee jointly elect full rates.
Skills Development Levy (SDL)
Every employer pays SDL on all employees physically working in Singapore — citizens, PRs and foreigners alike. The rate is 0.25% of the employee’s first S$4,500 of monthly remuneration, subject to a floor of S$2 and a cap of S$11.25 per employee per month. Our SDL deep dive walks through the edge cases.
Foreign Worker Levy (FWL)
Employers of Work Permit and S Pass holders pay the Foreign Worker Levy in lieu of CPF. The rate depends on the sector, the worker’s skill tier and the firm’s foreign worker quota tier. Construction, marine shipyard and process sectors have their own tiered rates. Rates and Dependency Ratio Ceilings (DRC) are reviewed in each Budget — see our FWL 2026 guide.
Payroll Deductions: What Is Allowed
The Employment Act 1968 strictly limits authorised deductions from wages. Permitted deductions include CPF, income tax under withholding, court orders, recoveries for absence, and authorised donations (e.g. SHARE, CDAC, MBMF, ECF, Sinda — see CPF Board’s payroll guide). Unauthorised deductions are an offence and the Ministry of Manpower (MOM) can pursue restitution and prosecution.
Payroll Deadlines
| Obligation | Deadline |
|---|---|
| Payment of salary | Within 7 days after the end of the salary period (Employment Act s.21) |
| CPF contributions | 14 days after the end of the contribution month (i.e. 14th of the following month) |
| SDL | Together with CPF (same monthly cycle) |
| FWL | Auto-deducted via GIRO on 17th of the following month |
| IR8A / AIS submission | 1 March each year for prior year’s employment income |
| IR21 (foreign employee leaving Singapore) | At least 1 month before final cessation |
The Auto-Inclusion Scheme (AIS)
From YA 2025 onwards, AIS is mandatory for employers with 5 or more employees. Employers must submit the IR8A and supporting forms (Appendix 8A, 8B, IR8S) electronically through IRAS by 1 March. AIS data flows directly into employees’ tax returns, removing the need for them to declare employment income manually.
Common Payroll Errors and Their Cost
- Late CPF payment — interest at 1.5% per month, minimum S$5.
- Under-contribution — back-payment plus interest. CPF Board can prosecute under s.61 CPF Act.
- Incorrect classification of allowances — common with overseas service allowances and project completion bonuses.
- Missing IR8A submission — IRAS can compose offences at S$1,000 per employee.
- Unauthorised salary deductions — MOM enforcement under the Employment Act.
Payroll Software vs Outsourcing
Most Singapore SMEs use cloud payroll software (Xero Payroll, Talenox, HReasily, Payboy, QuickHR) that auto-calculates CPF and integrates with IRAS AIS. Larger employers run payroll on enterprise HR systems (Workday, SAP SuccessFactors) with local config. Outsourcing payroll to an accounting firm is common for sub-30 headcount businesses where in-house knowledge is thin.
Outsourcing typically costs S$15 to S$40 per payslip per month plus a fixed base fee. The trade-off is data confidentiality (your payroll vendor knows everyone’s salary) against the cost of an in-house payroll function. We discuss CorpPass and IRAS automation flow in our CorpPass 2026 guide.
Termination, Final Pay and IR21
Final salary must be paid on the last day of employment. CPF must be cleared in the next monthly cycle. For foreign employees leaving Singapore, the employer must file Form IR21 with IRAS at least one month before cessation and withhold all monies due (final salary, bonuses, leave encashment, gratuity) pending IRAS tax clearance. Releasing funds before tax clearance is an offence.
How Raffles Corporate Services Can Help
We run end-to-end outsourced payroll for over 500 Singapore companies — CPF lodgement, SDL, AIS submission, IR21 tax clearance, payslip distribution, leave management and integrations to Xero or Jaz. If you are setting up payroll for the first time or unwinding a messy in-house payroll, we can help.
Email [email protected] or message us at +65 8501 7133.
— The Editorial Team, Raffles Corporate Services
References: CPF Board — Employers · Employment Act 1968 · CPF Act 1953 · IRAS AIS · MOM