Understanding Singapore's Skills Development Levy (SDL)

Singapore's Skills Development Levy (SDL) was established under the Skills Development Levy Act of 1979 to fund the Skills Development Fund (SDF). This initiative supports workforce training programs and provides grants to employers who enroll employees in Continuing Education and Training (CET) courses. The goal is to enhance the skills of Singapore's labor force, boosting national competitiveness in the global economy.

Scope of SDL Coverage

SDL applies to a broad range of employees working in Singapore, including full-time, part-time, temporary, and contract workers, as well as foreign employees holding Employment Passes, S Passes, or Work Permits. However, exemptions exist for domestic workers like gardeners, maids, and private chauffeurs employed by individuals for personal services, employees whose work is unrelated to the employer's trade or business, and those not performing services in Singapore.

SDL Calculation Guidelines

SDL amounts vary based on monthly wages:

For employees earning less than SGD 800 per month, the SDL is fixed at SGD 2.
For monthly wages between SGD 800 and SGD 4,500, SDL is 0.25% of total remuneration or SGD 2, whichever is higher. For example, an employee earning SGD 3,500 would pay SGD 8.75 (3,500 × 0.25%).
For wages exceeding SGD 4,500, SDL is capped at SGD 11.25 monthly.

Bonuses and allowances must be included in the monthly wage calculation. If remuneration is paid in foreign currency, convert it to SGD using prevailing bank rates. SDL is not required for unpaid leave periods unless remuneration is still provided.

Payment Methods for SDL

Employers can pay SDL through:

CPF EZPay: For employers contributing to CPF, use the Central Provident Fund Board's EZPay system, which auto-calculates SDL for Singaporean and Permanent Resident employees. Foreign employees' SDL must be entered manually.
Direct Payment to SSG: Employers with only foreign staff must pay SDL directly to the SkillsFuture Singapore (SSG) by the 14th of each month. Late payments incur a 10% annual penalty on overdue amounts.

Record-Keeping and Compliance

Employers must maintain detailed records for each employee, including name, gender, age, address, ID number, job role, salary, and employment dates. SSG may request documents like CPF payment records (Form 90/90A) as proof. Providing false information can result in fines equal to unpaid SDL amounts, plus penalties up to SGD 2,500 or imprisonment.

Common SDL Scenarios and Exemptions

SDL does not apply to employees working entirely overseas, but employers must submit a nil SDL declaration via SSG's e-Filing system. Self-employed individuals (e.g., taxi drivers, hawkers) are exempt unless they hire employees. Third-party payroll providers do not relieve the primary employer of SDL obligations. If you receive a Notice of Assessment (NOA), review payroll records promptly to address any discrepancies.

SDL vs. Foreign Worker Levy (FWL)

SDL funds training initiatives under SSG, while the Foreign Worker Levy (FWL) is imposed by the Ministry of Manpower (MOM) to regulate work permit holders. Both levies serve distinct purposes and are managed separately.

Singapore Skills Development Levy (SDL) Guide for Employers | Compliance & Payment