What is Singapore Skills Development Levy (SDL)? Complete Calculation Guide of SDL

If you have been considering setting up a company in Singapore, you may have come across one phrase during your research – Skills Development Levy (SDL). In this article, we’ll explore what SDL really is and why it’s good to get help from payroll process outsourcing specialists when making your SDL contribution.

What is SDL contribution?

The SDL contribution is a levy that is collected by the government of Singapore to finance national skills development programs. This levy is paid partly by the employer and a matching contribution is made by the Singapore Government.

Why do you need to pay SDL contribution?

The funds collected through the SDL, are all pooled together to fund training programs under the National Continuing Education Training system. When the time comes for your employees to receive training, this combined SDL contribution will be used to implement the required training.

Your SDL contributions will essentially be used for:

  • Training of new employees
  • Introducing new skills to retrenched employees
  • Provision of grants for employee’s higher education

Who does the skills development levy benefit?

The SDL benefits all employees in a Singapore based firm, including those who are:

  • Singapore citizens
  • Singapore PR holders
  • Foreign nationals working in Singapore
  • Part-time and freelance workers working in Singapore

Who needs to pay the skills development levy?

Singapore based employers must mandatorily pay SDL for all of their employees, with the exception of:

  • An employee who is a domestic servant, chauffeur or gardener wholly and exclusively employed by an individual otherwise than in connection with that individual’s trade, business, profession or vocation.
  • An employee who does not render any services in Singapore in relation to a month. This excludes employee who is on leave for that month that is arising from his or her employment in Singapore.

Employers will be required to log on to the SDL system to submit a declaration on non-liability of SDL to SSG.

How to calculate SDL?

SDL levy = 0.25% * Total monthly wage of each employee

The minimum levy is $2SGD and the maximum is $11.25SGD per employee. Note: SDL is on the first $4,500 only. For those earning less than $800, a minimum of $2 is payable.

Breakdown of levy according to salary bands for SDL in Singapore

  • SGD $1-$800 – Minimum $2
  • SGD $800-$4500 – Salary x 0.25% (Example: $3,000 salary = $7.5 levy)
  • SGD $4500 and above – Levy of SGD $11.25

Who should you pay the SDL contribution to?

The Central Provident Fund (CPF) Board is the authorised collection agency for SDL. Employers can pay SDL with their employee’s CPF contributions which can be done through CPF EZPay.

How frequently is the SDL contribution made?

Skills development levy contributions are made on a monthly basis by both the Employer and the Singapore Government in an equal amount ratio.

When should you pay the skills development levy?

Every liable employer must pay SDL within 14 days after the end of the month.

What mechanisms can employers use to pay SDL?

The Skills Development Levy can be paid using four routes/mechanisms:

Are there refunds for overpayment?

Employers may login to the SDL system and submit a refund request via the E-Refund module. Supporting documents will be required along with the amount and indicated period. Supporting documents include:

  • Application for Interbank Giro Form
  • SDL Payment Receipts
  • Payroll Report of all the employees

How a payroll outsourcing services provider can help you with SDL?

Keeping track of the monthly SDL contributions you need to make can be tedious, especially if you’re new at it. Plus, as your company grows and you have hundreds to thousands of employees across job roles to manage, it can be an administrative nightmare to track, verify and make accurate contributions. This is where the services of a reputable payroll outsourcing company helps.

At Links International, we have years of professional experience helping Singapore based companies make their SDL contributions, as part of our Payroll Outsourcing Services. We take care of your payroll operations from employee hire to retire, including SDL contributions accurately and on time. If and where necessary, we support the relevant refunds processes too.

Contact us today to start discussions.

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