Employing foreign workers in Singapore comes with the responsibility of paying a monthly levy. This article provides a comprehensive guide to understanding Singapore's Work Permit levy rates, payment procedures, exemptions, and potential penalties for non-compliance.
What is The Foreign Worker Levy (FWL)?
The Foreign Worker Levy (FWL) is a fee that employers in Singapore must pay when hiring foreign workers. This levy is designed to regulate the demand for foreign labour while encouraging businesses to prioritise local hires. By implementing the FWL, the Singaporean government aims to maintain a fair balance between employer needs and local workforce interests.
The levy is divided into two main categories: one for S Pass holders and another for Work Permit holders. The applicable rates vary based on the employee's work pass type and the industry in which the business operates.
Current Monthly Foreign Worker Levy Rates
The monthly foreign worker levy rate for Work Permit holders varies significantly depending on the sector and the worker's skill level. Always refer to the latest rates from the Ministry of Manpower (MOM) for the most up-to-date information, as rates are subject to change.
Levy Rates by Sector:
| Sector | Tier | Quota % | Levy |
|---|---|---|---|
| Construction | Basic/Tier 1 | ≤10% | $450 |
| Construction | Tier 2 | >10% ─ 15% | $650 |
| Process | Basic/Tier 1 | ≤10% | $450 |
| Process | Tier 2 | >10% ─ 15% | $650 |
| Marine Shipyard | Basic/Tier 1 | ≤10% | $450 |
| Marine Shipyard | Tier 2 | >10% ─ 15% | $650 |
| Manufacturing | Basic/Tier 1 | ≤10% | $450 |
| Manufacturing | Tier 2 | >10% ─ 15% | $650 |
| Services | Basic/Tier 1 | ≤10% | $450 |
Factors Determining Work Permit Levy Rates
Several factors influence the Work Permit levy rate, leading to variations across sectors:
Sector-Specific Levy Rates:
- Construction: Based on worker qualifications (higher-skilled or basic-skilled) and the Man-Year Entitlement (MYE) system.
- Manufacturing: Based on worker qualifications and the Dependency Ratio Ceiling (DRC). A tiered system exists (Tier 1, Tier 2, Tier 3) with increasing levy rates as the percentage of foreign workers increases.
- Marine Shipyard: Similar to construction, based on worker qualifications and skills.
- Process: Based on worker qualifications and MYE status. MYE waivers lead to higher levy rates.
- Service: Similar to manufacturing, a tiered system based on worker qualifications and the Dependency Ratio Ceiling (DRC).
Other Influencing Factors:
- Worker's Qualifications and Skills: Higher-skilled workers attract lower levy rates.
- Number of Foreign Workers: Approaching or exceeding the maximum quota increases levy rates.
- Dependency Ratio Ceiling (DRC): This sets a maximum limit on the ratio of foreign employees to the total workforce, impacting levy rates in manufacturing and services.
Daily Levy Rates:
If a work permit holder isn't employed for a full month, a daily levy rate applies, calculated by dividing the monthly rate by the number of days in that month.
Work Permit Levy Payment Due Dates
GIRO Payments:
For GIRO payments, the levy is deducted on the 17th of the following month (or the next working day if the 17th falls on a weekend or public holiday).
Other Payment Methods:
For other payment methods, the levy is due by the 14th of each month (or the last working day before if the 14th is a weekend or public holiday).
Exemptions and Waivers for Work Permit Levy
Several situations may qualify for levy waivers or exemptions:
- Overseas Leave: At least 7 consecutive days, but no more than 60 days per year.
- Medical/Hospitalization Leave: Up to 60 days per year with medical certification.
- Police/Embassy Custody
- Death of the Worker
- Permanent Residency
- National Service
Applications for waivers must be submitted after the levy is charged and within one year of the levy bill.
How To Get Levy Waiver
| If the worker | You need |
| Attended the Onboard programme at the Onboard centre. | No documents needed. The levy waiver will be processed automatically. |
| Went on overseas leave for at least 7 consecutive days. Capped at 60 calendar days per calendar year. |
No documents needed. Apply for the waiver after the migrant worker returns to Singapore.
If the worker chooses not to return from their overseas leave, cancel the Work Permit before you apply for a waiver. |
| Was issued with hospitalisation leave by a Singapore-registered doctor from a local medical institution. Capped at 60 calendar days per calendar year. |
Medical certificate (MC) showing all of the following:
|
| Was in the custody of the police or embassy | A letter from the relevant organisation stating the period of custody. |
| Passed away | A copy of the death certificate. |
Consequences of Late Levy Payments
Late levy payments result in severe consequences:
- Late Payment Penalties: 2% per month or a minimum of S$20, capped at 30% of the outstanding levy.
- Work Permit Cancellation: Immediate cancellation of existing Work Permits.
- Restrictions on Applications: Inability to apply for new or renew existing Work Permits.
- Legal Action: Potential legal action to recover unpaid fees.
Foreign Worker Levy as Part of Deductible Business Expense
The foreign worker levy is a deductible business expense, which can reduce the company’s taxable income and the amount of employer tax need to pay. Learn more about the tax treatment of different business expenses on the Inland Revenue Authority of Singapore (IRAS)’s website!
Conclussion
Understanding and managing the Foreign Worker Levy is crucial for businesses in Singapore that employ foreign workers. Ensuring timely payments, staying updated on levy rates, and adhering to compliance requirements can help avoid penalties and maintain smooth business operations. As part of a well-structured payroll system, proper levy management contributes to efficient workforce planning. If you're looking for a seamless way to handle payroll, foreign worker levies, and other HR processes, check out our Payroll Service at Gutsy HQ. Let us help you simplify your payroll management today!
