Skills Development Levy (SDL)

The Skills Development Levy (SDL) is a mandatory levy paid by employers in Singapore to support workforce training and skills upgrading. It applies to both local and foreign employees and is collected by SkillsFuture Singapore (SSG). As a result, SDL helps fund national training initiatives and SkillsFuture programmes.

Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.

When it matters

• When hiring any employee in Singapore, including foreign workers.

• When processing monthly payroll and statutory contributions.

• When budgeting total manpower costs beyond CPF.

• When ensuring compliance with employment and payroll regulations.

Therefore, SDL applies to most employers regardless of company size.

Who must pay SDL

• All employers who hire employees under a contract of service.

• Employers of Singapore Citizens, Permanent Residents, and foreign employees.

However, self-employed persons and independent contractors are generally excluded.

SDL contribution rates (Singapore)

• SDL is calculated at 0.25% of an employee’s monthly remuneration.

• The minimum SDL is S$2 per employee per month.

• The maximum SDL is capped at S$11.25 per employee per month.

Consequently, SDL applies even to low-wage or part-time employees.

Key requirements & process (Singapore)

• Compute SDL based on each employee’s total monthly wages.

• Submit SDL together with CPF contributions via the CPF Board system.

• Pay SDL by the 14th of the following month.

• Keep accurate payroll records for audit and compliance purposes.

Meanwhile, SDL payments are automatically channelled to SkillsFuture Singapore.

Worked example (SG context)

A company employs a foreign employee earning S$3,000 per month. SDL is calculated at 0.25%, which equals S$7.50. As a result, the employer pays S$7.50 in SDL for that employee for the month, in addition to any other statutory obligations.

Common pitfalls & tips

• Assuming SDL applies only to local employees.

• Forgetting SDL for part-time or short-term staff.

• Missing payment deadlines, resulting in penalties.

• Confusing SDL with CPF, which applies only to locals.

Therefore, employers should automate SDL calculations within payroll systems.

FAQs

Q1. Is Skills Development Levy mandatory in Singapore?
A1. Yes. SDL is mandatory for all employers with employees under a contract of service.

Q2. Does SDL apply to foreign employees?
A2. Yes. SDL applies to both local and foreign employees.

Q3. Who collects the Skills Development Levy?
A3. SDL is collected by SkillsFuture Singapore through the CPF Board system.

Q4. Is SDL tax-deductible for employers?
A4. Yes. SDL is generally deductible as a business expense.

Q5. What happens if SDL is paid late?
A5. Late payment may result in interest charges and enforcement action by the authorities.