What Is Singapore Skills Development Levy (SDL) and How Does This Affect Your Business? (2024 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 SkillsFuture Singapore Agency (SSG).
All employers, whether private or a statutory board, are liable to pay the SDL on a monthly basis for each of their employees (both locals and foreign employees). The SDL contribution is not linked to other forms of payments made by employers to other statutory boards (e.g. CPF contribution), and is payable regardless of whether you tap into any SDF training assistance.
SDL collected from employers is channelled 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. In a way, it’s kind of additional payroll and HR support in Singapore that’s provided by the companies you work for. Essentially, the scheme allows the Workforce Development Agency to fund its 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
There are 4 options for employers to pay SDL.
CPF e-submit@web
CPF e-submit@AXS
E-payment service at SDL website
Cheque + SDL Return form
CPF e-submit@web & CPF e-submit@AXS
Employers can make the SDL payment along with their employees’ monthly CPF contributions via CPF e-submit@web or CPF e-submit@AXS (for employers with 10 or fewer employees).
CPF e-submit@web is a free web-based application developed by Central Provident Board Fund (CPF) Board. SingPass or CorpPass is required in order to login CPF e-submit@web.
You can also access the same CPF service from any of the AXS station, a self-service terminal that can be found island-wide.
E-payment Service at SDL Website
If your firm only employs foreigners, you can still make your SDL rate contributions for your foreign employees through E-payment service at the SDL website.
Cheque + SDL Return Form
Alternatively, paying by a crossed cheque payable to “Skills Development Fund”, or direct bank transfer is acceptable. You shall fill up a Skills Development Levy Return Form, which is downloadable from the SSG 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.
Due Date
As per the SDL Regulations, each employer is obligated to pay the SDL within 14 days after the end of each month. Failure to pay will attract a late payment penalty of 10% p.a of the outstanding fee.
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Any Exemptions 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. Any training programme they are interested in would have them spending their own money. However, if you are a self-employed business owner with employees, then a SDL contribution would be applicable to your employees' ordinary wage.
To benefit from the SDL exemptions, employers need to log in to the SDL system and give a declaration on the non-liability of SDL for the employees in question. This declaration is reviewed by the SSG 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.
Frequently Asked Questions
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The Singapore Skills Development Levy (SDL) is a compulsory levy scheme intended to promote lifelong learning and upskill workers in Singapore. It is imposed on employers for all employees rendering services in Singapore, including directors and part-timers. The funds collected are used to support workforce upgrading programmes and to provide training grants to employers when they send their employees for training under the Singapore Workforce Skills Qualifications system. Any business entity, such as a Singapore Holding company, is considered an employer under the Employment Act. Therefore, they are legally obliged to make SDL contributions.
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The Singapore Skills Development Levy (SDL) impacts accounting and tax in several ways. It is recognized as an expense in your financial statements and is tax deductible, reducing your taxable income. Accurate accounting is crucial for SDL compliance, ensuring correct payments and reporting. At Piloto Asia, we provide advisory and accounting services to help you navigate SDL requirements efficiently, ensuring compliance while optimizing your tax position.
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Yes, the Singapore Skills Development Levy (SDL) is a deductible expense for Singapore company tax purposes. This means that companies can claim a deduction for the amount of SDL that they have paid when they calculate their company tax liability.
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The income tax deadline in Singapore for filing SDL returns is April 15 of the following year. For example, the deadline for filing SDL returns for the year 2023 is April 15, 2024.
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The Singapore Skills Development Levy (SDL) is a mandatory levy imposed on all employers in Singapore, including holding companies. As a Singapore holding company, you are required to contribute to the SDL for all employees rendering services in Singapore, regardless of their role or employment type. This includes directors and part-time staff. The levy is used to fund workforce upgrading programs and training grants under the Singapore Workforce Skills Qualifications system. It's important for holding companies to comply with SDL requirements as part of their broader corporate responsibilities in Singapore.
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