{"id":4597,"date":"2025-09-25T15:00:00","date_gmt":"2025-09-25T07:00:00","guid":{"rendered":"https:\/\/dollarsandsense.sg\/business\/?p=4597"},"modified":"2025-09-25T15:18:38","modified_gmt":"2025-09-25T07:18:38","slug":"skills-development-levy-how-much-companies-need-pay","status":"publish","type":"post","link":"https:\/\/dollarsandsense.sg\/business\/skills-development-levy-how-much-companies-need-pay\/","title":{"rendered":"Skills Development Levy: What Is It And How Much Do Companies Need To Pay?"},"content":{"rendered":"\n

Companies play a crucial role in training and upskilling Singapore\u2019s workforce. This does not just happen on the job or supporting employees when they go for training courses, but also when collectively contributing to a Skills Development Levy (SDL) each month for all their employees.<\/p>\n\n\n\n

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

Read Also: <\/em><\/strong>10 Courses You Can Use Your SkillsFuture Credits To KickStart Your Entrepreneurial Journey<\/em><\/strong><\/a><\/p>\n\n\n\n

What Is The Skills Development Levy (SDL)?<\/h3>\n\n\n\n

In Singapore, employers pay a Skills Development Levy (SDL) for all their employees \u2013 local and foreign, regardless of whether they are hired on a permanent, part-time, casual or temporary basis. <\/p>\n\n\n\n

This Skills Development Levy is not part of an employee’s salary. Instead, it is a levy, paid on top of their Employer’s CPF Contribution for local employees and Foreign Worker Levy (FWL) for foreign employees. <\/p>\n\n\n\n

Many employers would also 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. CPF is simply collecting the Skills Development Levy on behalf of SkillsFuture Singapore (SSG). This is the same way CPF collects Self-Help Group (SHG) contributions on behalf of the SHGs.<\/p>\n\n\n\n

Funds collected from the Skills Development Levy is channelled into a Skills Development Fund (SDF), which 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<\/a>.<\/p>\n\n\n\n

Read Also: CDAC\/ECF\/MBMF\/SINDA: How Much Do Employees Contribute To Self-Help Groups In Singapore<\/a><\/em><\/strong><\/p>\n\n\n\n

The last revision to the Skills Development Levy was in 2008, or more than 15 years ago. <\/p>\n\n\n\n

Period<\/strong><\/td>Remuneration Ceiling<\/strong><\/td>SDL Rate<\/strong><\/td>Minimum Contribution<\/strong><\/td>Maximum Contribution<\/strong><\/td><\/tr>
1 Jul 2000 \u2013 30 Jun 2004<\/td>$1,500<\/td>1%<\/td>$2<\/td>$15<\/td><\/tr>
1 Jul 2004 \u2013 31 Aug 2005<\/td>$1,800<\/td>1%<\/td>$2<\/td>$18<\/td><\/tr>
1 Sep 2005 \u2013 30 Sep 2008<\/td>$2,000<\/td>1%<\/td>$2<\/td>$20<\/td><\/tr>
1 Oct 2008 – current<\/strong><\/td>$4,500<\/strong><\/td>0.25%<\/strong><\/td>$2<\/strong><\/td>$11.25<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Interestingly, the maximum contribution for employees has 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.<\/p>\n\n\n\n

As a point of reference, we can also see that the labour force in Singapore has grown to over 3.91 million in 2024 – compared to 2.86 million in 2008. This will have play a role in uplifting the overall amount of SDL collected.<\/p>\n\n\n\n

How Much Skills Development Levy (SDL) Do Employers Have To Pay?<\/h3>\n\n\n\n

You can use the Skills Development Levy Calculator<\/a> on the SkillsFuture website to calculate how much you need to pay.<\/p>\n\n\n\n

In general, companies have to pay 0.25% of an employee\u2019s 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.<\/p>\n\n\n\n

For example, the SDL can be calculated as:<\/p>\n\n\n\n

Employee<\/strong><\/td>Monthly Salary<\/strong><\/td>SDL You Need To Pay<\/strong><\/td><\/tr>
Alice<\/td>$500<\/td>$2.00<\/td><\/tr>
Benjamin<\/td>$800<\/td>$2.00<\/td><\/tr>
Cindy<\/td>$1,600<\/td>$4.00<\/td><\/tr>
Donovan<\/td>$3,000<\/td>$7.50<\/td><\/tr>
Elizabeth<\/td>$4,500<\/td>$11.25<\/td><\/tr>
Frank<\/td>$5,200<\/td>$11.25<\/td><\/tr>
George<\/td>$8,200<\/td>$11.25<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The Skills Development Levy is also tax-deductible.<\/p>\n\n\n\n

Are They Any Types Of Employees Excluded From The Skills Development Levy (SDL)?<\/h3>\n\n\n\n

Companies need to pay the Skills Development Levy on all their employees, but there are a few exceptions:<\/p>\n\n\n\n

#1 Employees Hired Outside Of Singapore<\/strong><\/h4>\n\n\n\n

Local or foreign employees who are hired outside of Singapore and who render their services wholly outside of Singapore.<\/p>\n\n\n\n

#2 Employees Hired Locally, But Work Outside Of Singapore<\/strong><\/h4>\n\n\n\n

Local or foreign employees who are hired in Singapore, but who render their service wholly outside of Singapore.<\/p>\n\n\n\n

#3 Fees Paid To Directors<\/strong><\/h4>\n\n\n\n

Fees paid to directors may not require Skills Development Levy contributions, but salary paid to directors require Skills Development Levy contributions.<\/p>\n\n\n\n

#4 Self-Employed Persons<\/strong><\/h4>\n\n\n\n

The earnings of self-employed persons (SEPs) are typically not considered remuneration under the Skills Development Levy Act. Skills Development Levy still needs to be paid for employees hired by the self-employed person.<\/p>\n\n\n\n

#5 Interns<\/strong><\/h4>\n\n\n\n

Typically, salaries for those on internships or students hired while on vacation are not required for Skills Development Levy contributions. <\/p>\n\n\n\n

#6 Employees hired by individuals<\/strong><\/h4>\n\n\n\n

Employees not hired in connection with the operations of a business typically do not require Skills Development Levy contributions. Such employees include, domestic servants, chauffeurs or gardeners.<\/p>\n\n\n\n

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 GoBusiness website<\/a>. Note that even for employees whom 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.<\/p>\n\n\n\n

If you believe you have overpaid your Skills Development Levy, you can submit a refund request on GoBusiness, by filling up a form via Levy > Skills Development Levy (SDL) > Apply for a Refund<\/a>.<\/p>\n\n\n\n

You will need to provide the following required details:<\/p>\n\n\n\n