Tax Clearance for Employees

Tax clearance is where the employer ensures that a non-Singapore Citizen employee who ceases employment in Singapore or plans to leave Singapore for more than three months pays all his taxes. As an employer, it is your responsibility to notify IRAS and seek tax clearance for the affected employees.

When Tax Clearance Is Not Required

Tax clearance is not required for the following categories of employees/scenario. If your employees fall under these categories/scenarios, you do not need to complete Form IR21 but you must submit the employee's income details to IRAS using Form IR8A or through the Auto Inclusion Scheme by 1st Mar:

  1. Singapore Citizens
  2. Singapore Permanent Residents (SPR)

    If your employee is an SPR who is not leaving Singapore permanently after he or she stops working for you, you may obtain a Letter of Undertaking (LOU) from the employee stating that he or she will not leave Singapore permanently.

    With the LOU, you are not required to seek tax clearance for the employee. Please keep the LOU for your record. 

    This concession, however, does not apply if the SPR is on overseas posting or employment. You are required to seek tax clearance for the SPR employee who is on overseas posting or employment unless he or she meets the conditions listed in Note 1 below.

  3. Non-Singapore Citizens who:

    1. Worked 60 days or less in a calendar year (Scenario 1), This does not apply to directors of a company, public entertainers or individuals exercising a profession, vocation or employment of a similar nature;
    2. Worked 183 days or more within a calendar year and earned less than $21,000 annually (Scenario 2);
    3. Worked 183 days or more within a continuous period straddling two years and earned less than $21,000 annually (Scenario 3);
      This two-year administrative concession is only applicable to foreign employees who have entered Singapore on or after 1 Jan 2007. It does not apply to directors of a company, public entertainers or individuals exercising a profession, vocation or employment of a similar nature.
    4. Worked for three continuous years or more and earned less than $21,000 annually (Scenario 4);

      For Scenario 1 to 4,  you do not need to file Form IR21 if the employee has not been previously employed by another employer in Singapore within the cessation year or the year prior to the cessation year.

      If you are unsure of the employee's past employment records, please e-File Form IR21 via myTax Portal.   You will receive an immediate online notification if tax clearance is not required for your employee.
    5. Are transferred to another company in Singapore due to:
      - company merger or takeover; or
      - restructuring or posting within the same group of companies

      You are required to notify IRAS of the transfer via myTax Mail at myTax Portal so that the employee's employment records can be updated. When composing the email, please indicate the “Nature of Enquiry” as “Tax Clearance/Form IR21” and attach the waiver of tax clearance template 

      Please ensure that the employment income of the affected employees from both the former and new employers are reported to IRAS via Form IR8A by 1 Mar of the following year. However, if the non-citizen employee subsequently ceases employment with the new company during the transitional year, tax clearance would be required.

    6. Are away from Singapore for three to six months for:
      - training;
      - business purposes;
      - overseas posting (See Note 1 below).

You may use the Tax Clearance Calculator (72KB) to check whether tax clearance is required.

Note 1 - Overseas posting:
Tax Clearance is not required for employees who are away for overseas posting provided the following conditions are met:

   i.       Period away from Singapore does not exceed six months;

   ii.      Employee would return to Singapore to work for the same employer and continue to hold valid
           work pass under the same employer during the period that the employee is away from Singapore;

   iii.     Singapore employer continues to pay the employee's salary during the said period.

The above applies to overseas postings on or after 1 Jan 2016 which are incidental to the employment in Singapore. Thus, tax clearance is still required for cases where the services rendered overseas are not incidental to the Singapore employment.

Tax Clearance Process

For non-Singapore Citizen employees who require tax clearance with IRAS, you must file Form IR21 at least one month before:

  1. The employee ceases to work for you in Singapore; or
  2. The employee starts an overseas posting; or
  3. The employee leaves Singapore for any period exceeding three months.

Please refer to our step-by-step guide on the tax clearance process.

Non-Compliance with Tax Clearance Process

If you are unable to give one month's notice, please state your reasons when you file Form IR21. Unless the Comptroller accepts a shorter notice, employers who fail to comply may be liable to a fine up to $1,000.

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