Payroll foreign workers in Singapore is not a simplified version of local payroll. It is a parallel system with different rules depending on the pass type. Employment Pass holders have no CPF but have income tax exposure and may qualify for Not Ordinary Resident tax status. S Pass holders have a foreign worker levy that the employer pays and can offset against business costs. Work Permit holders have salary requirements set by MOM that must be met for levy waiver eligibility. Getting any of these wrong is not a minor error. It can result in MOM penalties, levy miscalculations, or incorrect tax reporting.
Key Takeaways
- Employment Pass (EP) holders are not subject to CPF contributions: Neither the employer nor the employee contributes to CPF for EP holders .
- S Pass holders are not subject to CPF: Employers pay a foreign worker levy for S Pass holders instead. The levy rate depends on the employer’s dependency ratio .
- Work Permit holders are also exempt from CPF: The employer pays a foreign worker levy for Work Permit holders based on sector and worker qualifications.
- Foreign employees earning income in Singapore are subject to IRAS income tax: Employers must withhold tax for employees who work in Singapore for 60 days or fewer (short-term visitors) or file IR8A for employees who work more than 183 days.
- The minimum qualifying salary for EP is SGD 5,000 per month for most sectors: Below this threshold, the application will be rejected by MOM (Source: MOM, .
Employment Pass Payroll
Employment Pass (EP) holders are exempt from CPF contributions. Their payroll calculation is simpler than for local employees: gross salary minus applicable deductions (no CPF).
EP payroll considerations:
- No employer CPF contribution
- No employee CPF deduction
- Full gross salary is taxable income for IRAS purposes
- Employer must report total employment income on IR8A annually
- Short-term EP holders (180 days or fewer in Singapore in a year) may be assessed at the non-resident tax rate of 15% or the resident rate, whichever is higher
For EP holders who are not ordinarily resident in Singapore, the Not Ordinary Resident (NOR) scheme allows a tax concession for income attributable to time spent outside Singapore. NOR status requires a formal application to IRAS.
S Pass Payroll and Levy
S Pass holders are exempt from CPF, but their employer must pay a monthly foreign worker levy to MOM. The levy rate is SGD 550 or SGD 650 per S Pass holder per month, depending on the employer’s dependency ratio .
S Pass payroll processing:
- Calculate gross salary (no CPF deduction from employee)
- No employer CPF contribution
- Pay the foreign worker levy to MOM separately each month
- Include S Pass holder income on the annual IR8A filing
The levy is paid by the employer and is not deducted from the employee’s salary. It is a separate business cost.
The minimum qualifying salary for S Pass is SGD 3,150 per month (as of 2026, for most sectors). Below this, the S Pass cannot be maintained.
Work Permit Payroll and Levy
Work Permit holders are employed in sectors including construction, manufacturing, marine, and domestic work. They are exempt from CPF. Employers pay a foreign worker levy based on sector, worker qualifications, and the employer’s local-to-foreign worker ratio.
For HR payroll software Singapore handling Work Permit payroll, the key compliance points are:
- Minimum salary benchmarks set by MOM for some sectors
- Levy payment separate from salary processing
- MOM’s requirement to pay salary via bank transfer (not cash) for workers under the Employment of Foreign Manpower Act
MOM has sector-specific salary benchmarks for Work Permit holders in construction, marine, and process sectors. Employers who pay below these benchmarks may face issues at levy waiver applications or renewal.
“Some Singapore construction companies do not realise their Work Permit holders have a minimum salary benchmark requirement. Paying below it for years can go unnoticed until a levy audit flags it.”
IRAS Tax Obligations for Foreign Employees
All employees working in Singapore are subject to Singapore income tax on income earned from work in Singapore. The tax treatment depends on the number of days worked in Singapore.
Tax residency rules:
| Days in Singapore in the year | Tax treatment |
|---|---|
| 60 days or fewer | Tax-exempt for short-term visits (subject to conditions) |
| 61 to 182 days | Non-resident rate applies (15% or graduated rate, whichever is higher) |
| 183 days or more | Resident tax rates apply |
Employers must withhold tax for non-resident employees or obtain a No-Objection Letter from IRAS before they leave Singapore. This is commonly called the “tax clearance” process.
Frequently Asked Questions
Do Singapore permanent residents on their first year pay CPF?
Yes, but at graduated rates. New Permanent Residents pay CPF at reduced rates in the first two years. From the third year, full CPF rates apply. The graduated rate table is published by the CPF Board .
Is a Singapore employer required to pay the foreign worker levy for EP holders?
No. The foreign worker levy does not apply to Employment Pass holders. Levy applies to S Pass and Work Permit holders only. EP holders are in a separate category and there is no levy associated with them.
What happens if a Singapore employer underpays the foreign worker levy?
MOM will issue a levy shortfall notice and require payment of the outstanding levy amount. Persistent underpayment can result in restrictions on hiring additional foreign workers and may affect pass renewals.
Can foreign employees in Singapore contribute to CPF voluntarily?
Employment Pass and S Pass holders can make voluntary CPF contributions as members. However, the employer is not required to match these contributions. Voluntary contributions go to the employee’s CPF account but do not create an employer obligation.
What is tax clearance and when must Singapore employers apply for it?
Tax clearance is the process of withholding the final salary of a foreign employee until IRAS confirms their Singapore tax liability is settled. Employers must notify IRAS at least one month before the employee’s last day when a foreign employee ceases employment or leaves Singapore for more than three months.
Conclusion
Foreign worker payroll in Singapore is parallel to local payroll, not simpler. EP holders have no CPF but full income tax exposure. S Pass and Work Permit holders have no CPF but levy obligations. All foreign employees require IRAS reporting. The rules differ by pass type and residency duration. Payroll software that handles Singapore foreign worker categories correctly eliminates the risk of levy miscalculations and incorrect IRAS filing. Verify your software can differentiate between EP, S Pass, and Work Permit payroll rules before processing the first foreign worker’s salary.
Tipsoi’s payroll module handles all Singapore pass types with correct CPF, levy tracking, and IRAS reporting per category. Get a quote. Download Tipsoi’s Singapore Foreign Worker Payroll Guide for a pass-type compliance reference.