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The Skills Development Levy, or SDL, is a payroll cost that every Singapore employer carries on top of wages. The CPF Board says the rate is 0.25% of each employee's monthly total wages, with a floor of S$2 and a ceiling of S$11.25. The money funds national training schemes. Checked on .
How much is the Skills Development Levy?
It is 0.25% of an employee's monthly total wages, with limits at both ends. The CPF Board gives the bands below.
| Employee's monthly total wages | SDL payable by the employer |
|---|---|
| Under S$800 | S$2 |
| S$800 to S$4,500 | 0.25% of the wages |
| Above S$4,500 | S$11.25 |
Three quick examples using the same rule. An employee on S$3,000 a month costs you S$7.50 in SDL. An employee on S$6,000 hits the cap, so you pay S$11.25. A part-timer on S$600 triggers the floor, so you pay S$2.
Because the cap is reached at S$4,500, a higher salary does not raise the levy. For a company with well paid staff, SDL is a small fixed amount per head.
Who has to pay SDL in Singapore?
The employer. The CPF Board says SDL is payable for all employees working in Singapore, whether permanent, part-time, casual or temporary. It is not taken from the employee's pay.
A company with a single director on payroll still has an employee. If that director is paid wages through the company, the same rule applies. Check your own payroll to see who is counted, and use the CPF for employers page to see the wider set of employer duties.
Do foreign employees count for SDL?
Yes. Employment Pass, S Pass and Work Permit holders working in Singapore are employees, so you pay SDL for them too. The route is different, though. The CPF Board says SDL for local employees is paid to the CPF Board together with the monthly CPF contributions. For foreign employees only, it is paid directly to the Skills and Workforce Development Agency.
This catches new employers out. If your first hire is an Employment Pass holder, CPF does not apply to that person, but SDL still does. Read the CPF registration page for how an employer account is opened, and use the CPF page quoted at the end of this article to confirm the payment route for your payroll.
How do you round the total?
Calculate SDL for each employee, add the amounts up, then round the total down to the nearest dollar. You do not round each employee. The CPF Board example: five employees with S$40.75 of SDL in total pay S$40.
What is the difference between SDL and the foreign worker levy?
They share the word levy and nothing else.
| Skills Development Levy | Foreign worker levy | |
|---|---|---|
| Who it applies to | Every employee working in Singapore | Work Permit and S Pass holders only |
| How it is set | 0.25% of wages, S$2 to S$11.25 | Fixed monthly amount set by MOM |
| Who collects | CPF Board, or the Skills and Workforce Development Agency for foreign employees | MOM |
If you employ an S Pass holder, you pay both. The foreign worker levy page has the monthly rates MOM publishes. An Employment Pass holder carries no foreign worker levy, according to MOM, but SDL still applies.
What should a small employer do each month?
- Pull the monthly total wages for every employee.
- Apply 0.25% to each, with the S$2 floor and S$11.25 cap.
- Add the figures and round the total down.
- Pay it by the route that fits the staff: with CPF for local employees, direct to the agency for foreign employees only.
- Keep the working with your payroll records.
Payroll software normally does this for you. If you want a person to run it, the payroll services page lists what such providers handle.
What does SDL cost across different wages?
The rule is easy to apply once you see a few lines. These figures follow the CPF Board bands.
| Monthly total wages | SDL for that employee |
|---|---|
| S$600 | S$2 |
| S$1,000 | S$2.50 |
| S$2,000 | S$5 |
| S$3,000 | S$7.50 |
| S$4,000 | S$10 |
| S$4,500 | S$11.25 |
| S$6,000 | S$11.25 |
For a team of ten people all paid above S$4,500, the maximum SDL is the same for each, so the bill does not climb as you give raises.
How is SDL different from CPF?
CPF is a savings scheme for Singapore citizens and permanent residents, with an employer share and an employee share. The CPF Board gives an employer share of 17% for employees aged 55 and below with monthly wages above S$750, where the person is a citizen or a permanent resident past the first two years. SDL is a small levy on wages that has no savings element and is paid for every employee. See CPF for employers for the full CPF picture.
What mistakes do new employers make?
- Assuming SDL only applies to locals. It applies to foreign employees as well.
- Rounding each employee's SDL instead of rounding the total down.
- Mixing it up with the foreign worker levy, which is a separate MOM charge.
- Leaving out part-time or casual staff when counting.
- Forgetting that SDL is an employer cost, then deducting it from pay.
Independent guide
This page comes from SingaporeCompanySetupGuide.com, an independent guide. We are not the CPF Board or any agency, and we do not file anything for you. If you want a provider to run payroll, use the quote form on this site and we pass your request to suitable firms. They reply with their own prices.
Sources
- CPF Board, How do I calculate and pay the Skills Development Levy, https://www.cpf.gov.sg/service/article/how-do-i-calculate-and-pay-the-skills-development-levy-sdl (rate, floor, cap, who pays, foreign employee route, rounding)
- MOM, Employment Pass key facts, https://www.mom.gov.sg/passes-and-permits/employment-pass/key-facts (no levy for Employment Pass)
- MOM, Foreign worker quota and levy requirements, https://www.mom.gov.sg/passes-and-permits/work-permit-for-foreign-worker/foreign-worker-levy/what-is-the-foreign-worker-levy (foreign worker levy compared)
