Skills Development Levy (SDL)
Most of us know that our employees are obligated to contribute to their employees’ CPF accounts. However, most of us don’t know that CPF is only one of the employers’ many statutory obligations to adhere to. The SDL is one of them.
If you are completely unsure about what SDL is, read on to find out more.
What is the Skills Development Levy?
The Skills Development Levy (SDL) is a contribution made by your company that is pooled into the Skills Development Fund (SDF). This fund helps to train the Singapore workforce.All employees in Singapore will have to pay this levy monthly, no matter if you’re an established subsidiary or start-up. The statutory SDL contribution rate is 0.25% of your employee’s monthly remuneration, with the minimum levy being $2 for employees earning below $800 a month. The maximum remuneration is capped at $11.25 a month for employees earning above $4500.
If you are non-compliant with the SDL, you will be penalised or held responsible under the stated rule.
What is the Skills Development Fund (SDF)?
Along with the SDL, the SDF is managed and controlled by the SkillsFuture Singapore Agency (SSG). When employers send their employers for training under the National Continuing Education Training System, the SDF will provide them grants.
This was put in place to encourage companies to send their employees for skills upgrading.
Do I have to pay the SDL for all my employees?
You have to pay the SDL for all your employees working in Singapore regardless of their employment type or nationality. Holders of Work Permits and Employment Passes are also included.
However, interns or students currently enrolled in a local university programme are excluded.
How do I pay?
You can pay your SDF funds together with the employee’s CPF contributions for Singaporeans and PR holders. If you have foreign employees under you, you can directly pay their SDL to the SSG.
Do take note that your SDL must not be deducted from the employee’s salary as it is a contribution made by the employer.
SDL payments are due on the 14th date of the following month. Late payments will be subjected to a penalty of 10% per year for late contributions on outstanding amounts. Take note to ensure that payment is correct and that you have not given any false or misleading information.
If you are found to be negligent or give false information about your ability to pay the SDL, you will be found guilty of an offence under section 11(1)(b) of the Skills Development Levy Act. If convicted, not only will you be liable to pay the amount of SDL due but also fined up to $2500 or jailed for up to 6 months or both.
If you have unintentionally been paying lower than required, you can make up for payment to the SSG or CPF Board. If you believe that you have overpaid, you can also request a refund via the SSG website.
Compliance with SDL
The SDL is a pretty straightforward scheme that you will have to comply with as an employer. Be sure to get this settled as soon as you set up your company to avoid confusion or trouble with the authorities later on. If you need more help with paperwork or accounting services, reach out to us at Margin Wheeler and we’ll get it sorted for you!