Skills Development Levy: What Is It And How Much Do Companies Need To Pay?

Companies play a crucial role in training and upgrading Singapore’s workforce. This does not just happen on the job, but also when collectively contributing to a Skills Development Levy (SDL) each month for all their employees.

The Skills Development Levy, or its equivalent in the past, traces its roots as far back as 1979 under the Skills Development Levy Act (Chapter 306), to impose a skills development levy on employers and for the establishment of a Skills Development Fund.

What Is The Skills Development Levy (SDL)?

In Singapore, companies have to pay a Skills Development Levy (SDL) for all their employees – local and foreign, regardless of whether they are hired on a permanent, part-time, casual or temporary basis. This is on top of their employer CPF contribution for local employees and Foreign Worker Levy (FWL) for foreign employees.

Many employers would notice that they need to pay the Skills Development Levy at the point of making employer and employee CPF contributions for their employees each month. While CPF Board collects the Skills Development Levy, it is on behalf of the SkillsFuture Singapore Agency (SSG).

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Funds collected from the Skills Development Levy is channelled into a Skills Development Fund, that is used to support workforce upgrading programmes and to provide training grants when companies send their employees for eligible training under the national Continuing Education Training (CET) system.

The last revision to the Skills Development Levy was in 2008, or more than 10 years ago. 

PeriodRemuneration CeilingSDL RateMinimum ContributionMaximum Contribution
1 Jul 2000 – 30 Jun 2004$1,5001%$2$15
1 Jul 2004 – 31 Aug 2005$1,8001%$2$18
1 Sep 2005 – 30 Sep 2008$2,0001%$2$20
1 Oct 2008 – current$4,5000.25%$2$11.25

Interestingly, the maximum contribution for employees have fallen to an even lower level than it was in 2000. Of course, the remuneration ceiling has increased, which may offset some of the effects.

How Much Skills Development Levy (SDL) Do I Have To Pay For Each Employee?

You can use the Skills Development Levy Calculator on the SkillsFuture website to calculate how much you need to pay.

In general, companies have to pay 0.25% of an employee’s total monthly wages, up to the first $4,500. A minimum of $2 is payable for employees who earn under $800 each month, and a maximum of $11.25 is payable for employees who earn more than $4,500.

For example:

EmployeeMonthly SalarySDL You Need To Pay
Alice$500$2.00
Benjamin$800$2.00
Cindy$1,500$3.75
Donovan$3,000$7.50
Elizabeth$4,500$11.25
Frank$8,000$11.25

The Skills Development Levy is also tax-deductible.

Are They Any Types Of Employees Excluded From The Skills Development Levy (SDL)?

Typically, companies need to pay the Skills Development Levy on all their employees. However, there may be a few exceptions:

#i Employees hired outside of Singapore – local or foreign employees who are hired outside of Singapore and who render their services wholly outside of Singapore.

#ii Employees hired locally, but work outside of Singapore – local or foreign employees who are hired in Singapore, but who render their service wholly outside of Singapore.

#iii Fees paid to directors – Fees paid to directors may not require Skills Development Levy contributions, but salary paid to directors require Skills Development Levy contributions.

#iv Self-Employed Persons – The earnings of self-employed persons are typically not considered remuneration under the Skills Development Levy Act. Skills Development Levy still need to be paid for employees hired by the self-employed person.

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#v Interns – typically, salaries for those on internships or students hired while on vacation are not required for Skills Development Levy contributions. 

#vi Employees hired by individuals – employees not hired in connection to the operations of a business typically does not require Skills Development Levy contributions. Such employees include, domestic servant, chauffeur or gardener.

For more clarifications on the types of employees you need to pay the Skills Development Levy for, you can refer to the FAQ found on the Skills Future website. Note that even for employees that you do not have to pay a Skills Development Levy for, you may need to submit a declaration of non-liability of SDL to SkillsFuture.

If you believe you have overpaid your Skills Development Levy or have further clarifications, you can call the SkillsFuture Singapore Agency at 6785 5785 or write in at:

1 Marina Boulevard
#18-01 One Marina Boulevard
Singapore 018989

How Do Companies Tap On The Skills Development Fund?

The Skills Development Fund aims to encourage skills development and lifelong learning in Singaporeans.

Whether you are an individual or an employer, you can visit the Skills Connect website to apply for or find out more about how you can tap on the extensive schemes, including training grants and funding, as well as course directory and programmes and initiative that is provided.  

Read Also: Planning To Start A Business In 2020? Here’s Your Guide To Grants, Tools, And Resources Available

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