Singapore Skills Development Levy (SDL) – What is this and how is it relevant to your business? (2018 Update)
This guide is intended for new employers of Singapore, whether you are a newly setup Singapore subsidiary of a foreign entity, or a local start-up. It is a levy imposed on all Singapore employers on all of their full or part-time employees.
What is Skills Development Levy?
The Skills Development Levy, SDL in short, is a fee imposed upon all employers under the Skill Development Levy Act. The levy is managed and controlled by the Workforce Development Agency (WDA) of Singapore.
All employers, whether private or a statutory board, are liable to paying the SDL on a monthly basis for each of their employees. The SDL contribution is not linked to other forms of payments made by employers to other statutory boards (e.g. CPF), and is payable regardless of whether you tap into any SDF training assistance.
SDL collected from employers are channeled to a Skill Development Fund (SDF), which is in turn used to support upgrading programs for the Singapore workforce, and facilitate training grants for employers when they tap on any Continuing Education and Training centres. Essentially, the scheme allows the Workforce Development Agency to fund their training centres to benefit Singapore employers and the workforce.
Statutory contribution rate & levy for various salary bands
From October 2008, the statutory Singapore SDL contribution rate is 0.25% of a staff’s monthly remuneration, capped at $11.25 per month. There is a minimum levy of $2.
For monthly salary bands below, the equivalent levy is:
- $1-800 SGD - $2 SDL levy
- $800 – 4,500 SGD – Salary x 0.25% (e.g. $3,000 salary = $7.5 levy)
- Above $4,500 SGD - $11.25 SDL levy
You can easily calculate the levy from the government's SDL calculator.
How to arrange your SDL payment and due dates
Employers can perform any SDL calculations and transactions, perform company profile maintenance on the portal freely with your SingPass (for companies employing local Singaporeans). If your firm only employ foreigners, you can still make your SDL rate contributions for your foreign employees through E-payment service at the SDL website. Alternatively, paying by a crossed cheque payable to “Skills Development Fund”, or direct bank transfer is acceptable.
For first-timers, you shall fill up a Skills Development Levy Return Form, which is downlodable from WDA website. Put in details such as your company’s name, payment period, contact person and address together with your first payment and subsequently you would receive a letter in the second month for registration to the online portal, where you could arrange future payments online.
As per the SDL Regulations, each employer is obligated to pay the SDL within 14 days after the month under review is completed. Failure to pay will attract a late payment penalty at 10% p.a of the outstanding fee.
Any exemption for Skills Development Levy?
For certain types of employees, employers will be exempted from paying the SDL. This includes an employee who is a domestic servant, a gardener, or a chauffeur wholly and exclusively employed by an individual otherwise than in connection with that individual’s trade, business, profession or vocation.
If your employee does not render any services in Singapore for the month involved, you’re also exempted from the SDL contribution for that month. This excludes employee who is on leave for that month that is arising from his or her employment in Singapore.
In the case of a self-employed person such as hawkers or taxi drivers who own their business, their earnings are not considered ‘remuneration’ for the purposes of the Skills Development Levy Act and thus the SDL is not applicable. However, if you are a self-employed business owner with employees, then a SDL contribution would be applicable on your employees’ remuneration.
To benefit from the SDL exemptions, employers need to log in to the SDL system and give a declaration on non-liability of SDL for the employees in question. This declaration is reviewed by the WDA through the E-Declaration page. It is a simple to fill form with easy to fill information regarding employees.
For other queries on Singapore Skills Development Levy, you may check out their FAQ here.