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Understanding Tax Clearance in Singapore

IR21 applies to foreign employees who are non-Singaporean. It is usually required when a foreign employee ceases employment with you in Singapore, goes on an overseas posting or plans to leave Singapore for more than three months. The employer must notify IRAS at least one month in advance by filing Form IR21, and withhold all the money owed to you from the date they become aware of your impending departure. 

Tax clearance process

Tax Clearance For Local Employees

Singaporean employees are not required to do so because the process is parked and simplified under IR8A Form.

Even for a Singaporean Permanent Resident (SPR), tax clearance is not necessary if they have no intention of leaving the country permanently after termination of employment.

Tax Clearance For Non-Singaporean Employees

This applies to all work pass holders including Personalised Employment Pass (PEP) holders. For all non-citizen employees who leave Singapore for more than three months, you must complete and submit Form IR21 to IRAS. Employees who complete this form will not have IR8As, and Jusixty excludes them from the XML file generated for e-Submission to IRAS.

How To File IR21

You may want to fill out and submit the IR21 electronically for expedited tax clearance. After signing in with your company’s CorpPass credentials, you can do this through IRAS’s myTaxPortal.

Once you’ve logged in, you should enter your employee’s income figures for the year of departure.

Meanwhile, you should withhold all pending dues from your employees (including lump-sum payments, gratuities, reimbursements, allowances, leave pay, overtime pay, and so on.)

IRAS takes approximately 7 working days to process the e-filed IR21. Processing paper-filed forms takes about 21 working days.

Within three working days of IRAS processing the form, you will receive a Tax Clearance Directive via myTax Portal. The IRAS also sends it via post, which should arrive within five to seven working days.

If the Clearance Directive turns out to be a Tax Directive, you must remit the funds to IRAS within ten days. Otherwise, a Notification to Release Monies indicates that you can pay the employee.

When Tax Clearance Is Not Required

Besides Singapore citizens and permanent residents, tax clearance is not required for the following:

  • Non-Singapore citizen working in Singapore for less than 60 days in a calendar year. This does not apply to company directors, public entertainers, or individuals engaged in a similar profession, vocation, or employment.
  • Non-Singapore citizen working in Singapore for at least 183 days in a calendar year and earning less than $21,000 per year.
  • Non-Singapore citizen employee who worked in Singapore for at least 183 days in a two-year period and earned less than $21,000 per year. This two-year administrative break is only available to foreign employees who arrive in Singapore on January 1, 2007. It does not apply to company directors, public entertainers, or individuals engaged in a similar profession, vocation, or employment.
  • Non-Singapore citizen working in Singapore for three years or more and earning less than $21,000 per year.

The IRAS website also includes a Tax Clearance Calculator, which you can use to determine whether tax clearance is required.

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