Singapore Tax Clearance for Foreign Employees

Tax clearance is a crucial process for foreign employees who cease employment in Singapore. Whether you're a foreign worker planning to leave Singapore permanently, taking on a new role with a different employer, or completing a short-term assignment, understanding the tax clearance process ensures compliance with the Inland Revenue Authority of Singapore (IRAS). This guide provides a detailed overview of Singapore's tax clearance requirements, the filing process, and tips for employers and employees to streamline the procedure.

What is Tax Clearance?

Tax clearance ensures that all income taxes are fully paid before a foreign employee leaves Singapore or changes employment. Employers must withhold all payments due to the employee until the clearance is completed.

Who Needs Tax Clearance?

1. Foreign Employees

• Employment Pass (EP) holders.
• S Pass holders.
• Work Permit (WP) holders.

2. Situations Requiring Tax Clearance

• When the employee ceases employment in Singapore.
• When the employee transfers to a new employer.
• When the employee plans to leave Singapore for more than three months.

When Tax Clearance is Not Required

• Singapore Citizens and Permanent Residents (PRs) not leaving Singapore permanently.
• Employees working for 60 days or less in a calendar year (except directors, public entertainers, or certain professionals).
• Employees working for 183 days or more and earning less than S$21,000 annually.
• Employees transferred within the same group due to company mergers.
• Employees sent overseas for short-term assignments (less than six months).

Employer's Responsibilities

• File Form IR21: Submit at least one month before the employee's last working day.
• Withhold Payments: Hold back salary, bonuses, and benefits until tax clearance is completed.
• Ensure Accurate Filing: Report all taxable income, including housing, transport, and stock options.

How to File Form IR21

1. Log in to myTax Portal via CorpPass.
2. Complete the employee's details, including tax residency and employment information.
3. Declare all taxable income, including salaries and allowances.
4. Submit the completed IR21 form online.
5. Pay any outstanding taxes after receiving the Notice of Assessment (NOA) from IRAS.

Penalties for Non-Compliance

Employers who fail to file Form IR21 may face penalties of up to S$1,000. If late filing is unavoidable, an explanation must be provided in the submission.

How Apexia Corporate Advisory Can Help

• Tax Clearance Filing: Assistance with accurate and timely submission of Form IR21.
• Tax Advisory for Employers: Guidance on obligations, income declarations, and tax withholding.
• Employee Support: Advisory services for foreign employees to understand tax liabilities.
• Dispute Resolution: Assistance with resolving tax-related issues with IRAS.