What You Need to Know About Taxation and Benefits Under EOR in Singapore

If you’re exploring EOR taxation and employee benefits in Singapore, you’re already thinking like a strategic founder. Singapore is a powerhouse for global expansion, but understanding the nuances of EOR taxation and employee benefits in Singapore is essential if you want to scale compliantly and attract top talent. In this guide, we break down everything you need to know — from tax obligations and CPF contributions to the benefits landscape — so you can make informed decisions as you hire or expand your team.

That’s where an Employer of Record (EOR) comes in. In this post, we´re going to walk you through what you need to know about taxation and employee benefits when using an EOR in Singapore. Whether you’re planning to hire remote employees or set up a team locally, understanding these elements will help you make the right decisions.

What is an Employer of Record (EOR)?

Before diving into the specifics, let’s quickly go over what an Employer of Record (EOR) is. In simple terms, an EOR is a third-party company that acts as the official employer for your workforce. They take on the responsibility of managing employee payroll, benefits, and compliance with local labor laws.

For businesses that are expanding into new markets like Singapore, using an EOR makes the process of hiring much smoother. You don’t have to worry about setting up a legal entity in Singapore, handling payroll, or ensuring compliance with tax laws and employee benefits—your EOR takes care of all of that.

Taxation Under EOR in Singapore

Singapore is known for its relatively simple and business-friendly tax system, which makes it an attractive destination for global companies. But even with its straightforward tax policies, there are still important things you need to understand about how taxation works for both employers and employees when you’re using an EOR.

Employer’s Tax Obligations

As an employer in Singapore, you have a few tax obligations. Here are the key ones:

Payroll Taxes: Employers must withhold and pay employee income tax on behalf of their employees. The rate of tax depends on the employee’s income level, with rates ranging from 0% to 22% for resident employees. For example, an employee earning SGD 50,000 annually would pay around SGD 2,600 in tax, based on the progressive tax rates.

CPF (Central Provident Fund): This is Singapore’s mandatory social security savings program. Both employees and employers contribute to the CPF. The employer’s contribution rate for CPF is 17% of the employee’s salary (up to a certain limit), and the employee contributes 20% of their salary.

Employee’s Tax Obligations

Employees in Singapore are taxed on their income, with progressive rates. Here’s a quick breakdown:

Income Tax: Singapore’s tax system is based on residency. Singapore tax residents (those who stay for at least 183 days in a year) are taxed on income earned worldwide. Non-residents, on the other hand, are taxed only on income earned within Singapore.

Tax Rates: The personal income tax rate starts at 0% for income up to SGD 20,000 and goes up to 22% for income over SGD 320,000.

For example, an employee earning SGD 60,000 annually would pay around SGD 3,000 in taxes (after applying the progressive tax rates).

How an EOR Handles Taxes

Using an EOR in Singapore simplifies these tax obligations. They will handle all the tax filings and ensure that the right amounts are withheld from employee salaries. The EOR also manages any required payments to the tax authority (Inland Revenue Authority of Singapore, or IRAS) on behalf of the employer.

For foreign companies hiring in Singapore, this takes a huge burden off your shoulders. You don’t need to worry about whether you’re following local tax regulations or dealing with filing paperwork—your EOR ensures everything is compliant and accurate.

Employee Benefits Under EOR in Singapore

Now, let’s talk about employee benefits. Singapore offers a range of mandatory benefits, and an EOR helps ensure your employees are getting what they’re entitled to while making sure your company is compliant with the law.

Mandatory Benefits in Singapore

1. Central Provident Fund (CPF)

This is one of the key benefits in Singapore. Both the employer and the employee must contribute to the CPF, a government-run social security program. The CPF provides employees with savings for retirement, housing, and healthcare.

Employer Contribution: 17% of the employee’s salary (up to a salary cap).

Employee Contribution: 20% of their salary.

For example, if an employee earns SGD 5,000 a month, the employer will contribute SGD 850 to their CPF, while the employee will contribute SGD 1,000.

2. Paid Leave

Singapore mandates paid annual leave and sick leave for employees. Employees are entitled to:

7 to 14 days of paid annual leave (depending on how long they’ve been employed).

14 days of paid sick leave (with a doctor’s certificate).

3. Work Injury Compensation

All employers in Singapore are required to provide compensation for employees who are injured while working. This benefit covers medical expenses and loss of income due to work-related injuries.

Optional Benefits

1. Health Insurance

Many companies offer supplementary health insurance plans to cover expenses that the government’s public health insurance system does not cover. This can be an attractive benefit for employees, and it helps ensure they’re covered for medical costs.

2. Retirement and Investment Benefits

While CPF is mandatory, some employers offer additional retirement savings plans or investment schemes. For example, employees might be eligible for bonuses or employer-sponsored retirement savings programs.

3. Bonuses and Allowances

Many businesses in Singapore offer annual bonuses and allowances to employees, such as a 13th-month bonus, performance bonuses, or transportation and meal allowances.

How EOR In Singapore Manages Employee Benefits

An EOR makes sure your employees receive these benefits by managing all the contributions and ensuring they meet legal requirements. They also handle all the administrative work involved in managing benefits, leaving you free to focus on scaling your business.

Legal Compliance: The EOR Advantage

Understanding labor laws in Singapore can be complex, especially if you’re managing a remote team from overseas. An EOR ensures full compliance with Singapore’s employment standards. They will handle:

Employee Contracts: Ensuring contracts are compliant with local labor laws.

Termination Procedures: Handling terminations according to Singapore’s labor regulations.

Ongoing Compliance: Keeping you updated on any changes to the law, including CPF contribution rates, tax laws, or new benefits requirements.

Why EOR in Singapore Makes Sense

Whether you’re expanding your business into Singapore or hiring remote employees from the region, using an Employer of Record is a smart choice. An EOR not only ensures compliance with Singapore’s complex tax and employee benefit requirements but also reduces the administrative burden for your business. With their help, you can focus on growing your company while they handle the legalities.

If you’re considering expanding to Singapore or need help with HR and payroll, an EOR could be the solution you’ve been looking for. Book a discovery meeting with Agile EOR experts.