Follow us on social media:

Download our app‍s‍:

Download on the App StoreGet it on Google Play
Singapore
  • Hong Kong
  • UK
  1. Osome Blog Singapore
  2. Skills Development Levy: How Much Must Employers Pay on Their Staff?

Skills Development Levy: How Much Must Employers Pay on Their Staff?

Skills Development Levy: How Much Must Employers Pay on Their Staff?

After you register a new business in Singapore, you have to contribute to statutory funds, regardless if you’re an established subsidiary or a start-up. You have probably heard about contributing to CPF for your staff, but you might not have heard of the Skills Development Levy. That’s a levy for every company on their full or part-time employers. If you’re unsure of what the Skills Development Levy (SDL) is all about but now need to find out more, this article will address your questions.

Skip to:

What is the Skills Development Levy, and what is its purpose?
What is the Skills Development Fund (SDF)?
Who has to pay for SDL?
How do I pay the Skills Development Levy on behalf of my staff?
Remain Compliant

What is the Skills Development Levy, and what is its purpose?

All employers in Singapore need to pay this levy every month to the SkillsFuture Singapore Agency. The SDL contribution is separate from other mandatory payments made by employers to other statutory boards (i.e. Central Provident Fund or CPF) and is payable regardless of whether you are part of any Skills Development Fund (SDF) training assistance.

The Skills Development Levy (SDL) is managed and controlled by the SkillsFuture Singapore Agency (SSG).

From October 2008, the statutory SDL contribution rate is 0.25% of your employee’s monthly remuneration, capped at a maximum of $11.25 (applicable to those earning above $4,500 a month). There is also a minimum levy of $2 for your employees earning below $800 a month

The levy collected from your company will be pooled to the Skills Development Fund. By paying this levy, you’re contributing to a fund that will help train the Singapore workforce. With this, the government is encouraging you to send your workers for training as well.

What is the Skills Development Fund (SDF)?

Under the SDF system, companies can apply for subsidies for the training of their employees. The Skills Development Fund provides grants to employers who send their employees for training under the National Continuing Education Training system. This is the commonly known employer-based scheme to encourage companies to upgrade the skills of their employees.

Who has to pay for SDL?

All employers are liable to pay SDL for their employees following the Skills Development Levy Act. This mandatory levy is a tax-deductible corporate expense.

If you fail to comply with the SDL procedures, you might run the risk of being penalised or held responsible under the stated rule.

How do I pay the Skills Development Levy on behalf of my staff?

Here are the 4 steps you need to follow:

1. Determine the types of employees who are subjected to SDL

The SDL is payable for all your employees, including:

  • Local Citizen and Permanent Residents (PR) who are working full time and part-time
  • Employees under Employment Pass, EntrePass, PEP, Training Employment Pass or S-Pass holders

However, there are certain exemptions if your workers belong to the following groups:

  • Your employee is a chauffeur, gardener or domestic worker exclusively employed by you and not connected to your business, profession, trade or vocation
  • Your employee is not working in Singapore for that month.

For example, Stephanie works for BRACKETS Events Management (fictional company). In the month of September, she was required to undergo training at a tertiary institution and did not render any of her services. As such, BRACKETS events management does not have to pay Stephanie a SDL contribution for the month involved.

2. Find out about the statutory contribution rate & levy for different salary range  

From October 2008, the statutory SDL contribution rate is 0.25% of your employee’s monthly remuneration, capped at a maximum of $11.25 (applicable to those earning above $4,500 a month). There is also a minimum levy of $2 for your employees earning below $800 a month.

For example, Elizabeth earns $5,000 a month. You will have to pay her $11.25 levy. On the other hand, Veronica makes $3,450 a month. The SDL made payable to her would be 0.25% of her monthly remuneration, which amounts to $8.63.

If you have only 2 employees in the company, the total SDL payable for that month would be Elizabeth’s SDL and Veronica’s SDL:

$11.25 + $8.63 = $19.88

After rounding to the nearest dollar, the SDL payable is $20.

If you’re still unsure on how to compute this, you can use SDL’s Calculator for clarity.

3. Pay your SDL

As the levy is not a huge amount, you can pay a lump sum an opt for annual payment at beginning of the year or you can pay the SDL monthly along with CPF contributions.

Here are 3 options for you to choose from:

  • CPF e-submit@web or CPF e-submit@AXS

You can pay the SDL along with your employees' monthly CPF contributions through

CPF e-submit@web or CPF e-submit@AXS (if you have 10 or fewer employees)

  • E-payment service at SDL website

If there are only foreign employees at your company, you can make payment via E-Payment service at the SDL website.

  • Cheque + SDL Return form

You can also make payment directly to SkillsFuture Singapore (SSG) either by issuing a crossed cheque payable to ‘Skills Development Fund’ or direct bank transfer. You should also include mandatory details including your company’s name, payment period, contact person, and contact address in the Skills Development Levy Return Form.

4. Adhere to the due dates

According to the SDL Regulations, you are required to pay your employees the SDL within 14 days after the end of each month. Failure to do so will warrant a late payment penalty at 10% per annum of the outstanding fee.

Remain Compliant

Running a business is never easy, have a load off your mind with us helping with your corporate secretarial tasks quietly in the background so you can focus fully on taking your business to the next level. At Osome, we'll remind you of the deadlines so that you can submit documents in time.

The best part? All it takes is 3 minutes to get your paperwork in order - just sign up with us and we’ll take over those pesky documents straight away.

Share this post:

Tips to run your business smarter.
Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

You might like it

A Guide to Tax Regulations for E-commerce Businesses in Singapore
E-commerce

A Guide to Tax Regulations for E-commerce Businesses in Singapore

Starting an e-commerce business involves transactions that are multi-jurisdictional in nature and multiple anonymous parties. In this article, we have put together information about Singapore’s tax regulations that will help you to run your e-commerce business smoothly.

A Guide to Tax Evasion Penalties in Singapore
Tax

A Guide to Tax Evasion Penalties in Singapore

In Singapore, tax evasion or fraud is considered a criminal offence that is punishable by law. Have you ever wondered what the consequences of tax evasion are?

6 Reasons to Register Your Offshore Company in Singapore
Incorporation

6 Reasons to Register Your Offshore Company in Singapore

Singapore is one of the best countries in the world to incorporate an offshore company due to its strategic location, highly-skilled workforce and pro-business environment, making it ideal for entrepreneurs seeking to venture into the sizable Southeast Asian market.

How to Apply and Become Permanent Resident in Singapore
Foreigner's guide

How to Apply and Become Permanent Resident in Singapore

Permanent residency gets you as close to being a Singapore citizen as possible: you get all the same rights and benefits except being able to vote and hold public office. We look at the requirements, the documents you need to prepare, the timeline and chances for approval or rejection.

Should You Get a Directors and Officers Insurance to Protect Your Directors?
Running My Business

Should You Get a Directors and Officers Insurance to Protect Your Directors?

As a founder of a company or someone who makes management decisions for the company, you should know that your personal assets are at risk if you were to be named in a lawsuit. Would this D&O Insurance help?

Osome Wins Singapore Partner of the Year at Xero Asia Awards
News

Osome Wins Singapore Partner of the Year at Xero Asia Awards

A confirmation of Osome’s commitment at innovation and customer service, this is simply a great way to end 2020. Find out more on how and why we won.

Tech.Pass: What Tech Entrepreneurs Need to Know about this latest Work Pass in SG
Immigration

Tech.Pass: What Tech Entrepreneurs Need to Know about this latest Work Pass in SG

A new work pass dedicated to foreign technological experts has been introduced in Singapore to enable “the movers and shakers of the tech world” to bring in their expertise and create disruptive innovation.

A Guide to Central Provident Fund (CPF) for New Employers
Entrepreneur's Bootcamp

A Guide to Central Provident Fund (CPF) for New Employers

When you set up your company in Singapore, you will have to eventually hire to grow your business. As an employer, legal obligation to contribute to the Central Provident Fund (CPF) of staff who are Singapore citizens or Permanent Residents. Find out what exactly you need to know to stay compliant.

Skills Development Levy: How Much Must Employers Pay on Their Staff?
Running My Business

Skills Development Levy: How Much Must Employers Pay on Their Staff?

This article will elaborate on this less well known statutory fund that all employers need to pay on each staff they have. Find out how to pay it and more in this article.

Hiring Foreign Talent: The Difference Between an Employment Pass and S Pass
Running My Business

Hiring Foreign Talent: The Difference Between an Employment Pass and S Pass

Once you’ve registered your company in Singapore, and start looking to expand your operations. You might want to hire talent from overseas. Find out the difference between S-Pass and Employment so you can hire correctly and stay compliant.

A Guide to Setting Up a Special Purpose Vehicle Entity
Incorporation

A Guide to Setting Up a Special Purpose Vehicle Entity

In the last few years, it has been getting really popular for startups to create a SPV to help with the company financing, to attract investors to invest funds and receive equity when investing in the startup. Find out how to get one set up.

Filing Financial Statements: Does My Company Need to Do This?
Accounting

Filing Financial Statements: Does My Company Need to Do This?

The general rule is that it’s always good to prepare your financial statements but do you have to file them with ACRA too? Find out in this article.

You'll receive a verification email you'll have to open and confirm the subscription.

We’re using cookies! What does it mean?