Under Singapore Taxation Law, employer responsible to be reported for their employees other than corporate tax, such as IR8A, IR21 and Withholding Tax. Form IR8A and IR21 are one of the forms that the employer to be minded to report to IRAS for their employees, especially for those employer recruit foreign employees for their business.
FORM IR21
Form IR21 is the Application for Notification of a Non-Citizen Employee’s Cessation of Employment or Departure from Singapore, which the application that employer required to report for tax clearance when their foreigner employees cease employment with them and leave Singapore permanently, goes on an overseas posting or plans to leave Singapore more than one month. Employer must notify IRAS and withhold monies at least one month in advance of employee’s departure date.
If the employees fulfilled the following categories, tax clearance would NOT be required:
| Employee categories | Additional matters to take notes |
| (a) Singapore Citizens | |
| (b) Singapore Permanent Residence (PR) |
· Employer need to obtain a Letter of Undertaking (LOU) to declare that employee is not intended to leave Singapore permanently, and exempted from tax clearance. · However, if PR is on an overseas posting, the individual need to submit tax clearance. · If the PR tends to leave Singapore permanently, tax clearance would be required. · This would NOT apply to directors, public entertainer, and professionals |
| (c) Non-Singapore Citizens |
· Worked in Singapore less than 60 days due to the Income Tax Act, Or · Worked at least 183 days per year, or in a continuous period of 2 or 3 years, but earn less than SGD 21K |
| (d) Non-citizens who transferred to another company in Singapore, due to: |
· Company merger or takeover, OR · Restructuring or posting within the same group of companies |
| (e) Non-citizens who away from Singapore more than 6 months for training, business purpose, and oversea posting |
For overseas posting, the following requirements must be met: · Posting period does not exceed 6 months; Employee would return to Singapore to work for the same employer; · Employee continues to hold valid work pass under the same employer during the posting period; AND · Salary continues to be paid by the Singapore employer |
If an employee ceases an employment with an employer less than 60 days still required to file IR21 if the employee previously employed. For example, if Employer A has an employee who resigned and worked less than 60 days, and not paid the employee more than SGD 21K. However, prior to work with Employer A, the employee being worked with Employer B more than 60 days. Employer A would still require to file Form IR21 for the employee, even though the Employer B had file Form IR21 once before. This is because employee been previously employed, and the total duration that the employee stay in Singapore is more than 60 days, which is considered a non-tax resident and not qualified for exception from Singapore tax law.
On the other hand, there are some special case. This is could be that might not require the employer to file IR21, even though the employee work with the employer more than 60 days due to the employee’s background conditions. For example, employer would not require to file tax clearance if he recruit a foreign student who in Singapore for business or industrial internship for compulsory part of their educational programme, and only receive allowances for their daily expenses and board and lodging in Singapore.
However, if the foreign student has been entered into an employment contract with the employer and worked more than 60 days, the remuneration received by the student will be subject to tax in Singapore, therefore tax clearance will be required when the student cease the employment. In this case of background, the foreign student would be considered as non-tax resident and tax at non-resident rate 15% by IRAS based on the duration of the employment with the employer. While, he is studying at a Singapore local university/ college, and physically present in Singapore more than 183 days. The employer must first file the tax clearance (IR21) for the student, after then the student can appeal to IRAS by submitting application “Request for Tax Reassessment From ‘Non-Resident’ to ‘Resident’ Status” for re-assessment as a tax resident, which would reduce the tax payable.
What Would Happen When the Employer Failure to File IR21?
Employer might liable to SGD 1K penalty if failure to file Form IR21, or late filing without providing a valid reason.
FORM IR8A
Form IR8A is the Application Form of “Return of Employee’s Remuneration”. This application form is only for employer having lesser than 8 employees for reporting the employee’s earnings, and it should be provided to employee by 1 March each year. For the employer having more than 8 employees will receive a “Notice to Filter Employment Income Employees Electronically” to file employee’s income to IRAS under Auto Inclusion Scheme (AIS) for reporting employee’s earning. While, for employees’ overseas posting not incidental to Singapore employment, please note that it is not compulsory for employers to state the amount of overseas employment income in the Form IR8A. Employers participating in AIS are only required to select “Income from Overseas Employment” under Exempt/Remission Income Indicator.