A Guide to Foreign Worker Levies in Singapore

Posted by Written by Ayman Falak Medina Reading Time: 3 minutes

Singapore imposes a foreign worker levy as part of its workforce management strategy to regulate the employment of non-residents and reduce dependence on foreign labor. The levy is a pricing mechanism rather than a tax, designed to encourage employers to hire local talent while maintaining flexibility for industries that require additional manpower. As such, the levy applies to Work Permit and S Pass holders, while Employment Pass (EP) holders are exempt.

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Employers hiring foreign workers under these permits must comply with the levy requirements, which differ across industries based on government-set thresholds and sector-specific policies aimed at balancing local and foreign manpower.

As part of the levy framework, the Dependency Ratio Ceiling (DRC) sets a limit on the proportion of foreign workers a company can employ in its total workforce, ensuring controlled and strategic foreign labor usage. The DRC varies by sector:

  • Construction: 83.3%
  • Process: 83.3%
  • Marine Shipyard: 77.8%
  • Manufacturing: 60%
  • Services: 35%

Exceeding the DRC threshold results in significantly higher levy costs and may restrict a company’s ability to renew work passes, reinforcing the importance of workforce planning and compliance

Work Permit levy structure

The levy for Work Permit holders is sector-specific, with different rates for construction, manufacturing, services, and marine shipyard work. Levy rates are divided into two tiers:

  • Tier 1: For companies hiring foreign workers within the Dependency Ratio Ceiling (DRC). The levy rate is SGD 330 (US$246) for basic-skilled workers and SGD 650 (US$485) (US$485) for higher-skilled workers.
  • Tier 2: For companies exceeding the DRC. The levy rate increases to SGD 650 for basic-skilled workers and SGD 950 (US$709) for higher-skilled workers.

Sector-specific levy rates

  • Construction: Due to high foreign labor reliance, the levy rates are SGD 750 (US$560) for basic-skilled workers and SGD 950 for higher-skilled workers.
  • Manufacturing: The levy rates are SGD 330 for basic-skilled workers and SGD 650 for higher-skilled workers.
  • Services: The levy rates are SGD 450 (US$336) for basic-skilled workers and SGD 650 for higher-skilled workers.

S Pass levy framework

The levy for S Pass holders follows a different structure, reflecting the intermediate skill level of these workers.

Factors influencing the S Pass levy include several key elements that impact employer obligations and workforce management. The current levy rates are periodically updated by the Ministry of Manpower (MOM) to align with workforce policies. The DRC sets a limit on the number of S Pass holders a company can employ relative to its local workforce, ensuring a balanced labor market.

The tiered pricing system for S Pass holders follows a structure similar to that of Work Permit holders, where companies hiring within the DRC pay a standard levy rate, while those exceeding the quota face higher levies. This structure encourages businesses to manage their foreign workforce strategically and minimize over-reliance on non-resident employees. Additionally, the government periodically revises levy rates and DRC limits to adapt to changing economic conditions and industry needs

Sector-specific levy rates for S Pass holders

  • Services Sector:
    • Tier 1: SGD 650 (US$485) per month
    • Tier 2: SGD 650 (US$485) per month
  • Manufacturing Sector:
    • Tier 1: SGD 650 per month
    • Tier 2: SGD 650 per month
  • Construction Sector:
    • Tier 1: SGD 650 per month
    • Tier 2: SGD 650 per month
  • Marine Shipyard Sector:
    • Tier 1: SGD 650 per month
    • Tier 2: SGD 650 per month
  • Process Sector:
    • Tier 1: SGD 650 per month
    • Tier 2: SGD 650 per month

Levy concessions and exemptions

In certain situations, employers can benefit from levy waivers or reductions provided by the Ministry of Manpower. For instance, employers are exempt from paying levies for foreign workers on maternity leave. Similarly, levies may be waived for employees on extended medical leave, provided specific conditions are met. Further, some industries or business categories may qualify for special concessions under government support schemes.

Calculating and paying the levy

The foreign worker levy is calculated based on the worker’s pass type, skill level, and the employer’s adherence to DRC limits.

Employers must:

  • Use GIRO (General Interbank Recurring Order) as the primary payment method, which allows employers to automate levy payments through bank deductions, ensuring timely and hassle-free transactions, ensuring timely and automated deductions.
  • Pay by the due date to avoid penalties or restrictions on future work pass renewals.
  • Maintain accurate records of payments, as MOM conducts periodic audits.
  • Be aware of refund policies, which apply if a worker departs Singapore before the levy period ends.