The Inland Revenue Authority of Singapore (IRAS) has announced the withdrawal of the concessionary tax treatment that exempts employer’s contributions to mandatory overseas pension and provident funds.
Under the prior rules, contributions made on or before 31 December 2023 were not taxable to the employee if no corporate tax deductions were claimed by a Singapore company.
Under the new rules, mandatory contributions made on or after 1 January 2024 are fully taxable to the employee.
Tax implications
The imposition of tax on employer’s mandatory pension contributions will result in higher tax costs for employers who pay the taxes for employees, or smaller take-home pay if the employee pays his or her own taxes.
Singapore employers need not forfeit a corporate tax deduction in respect of such contributions to avoid tax on these amounts to employees.
For more information on the tax treatment of mandatory pension contributions in Singapore, please consult your regular BDO contact or the author of this article.
Soo Mee Wu
BDO in Singapore