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Tax deductions for recruitment of overseas talent

Tax Deduction

Organisations that employ the following groups of employees from overseas are eligible for the Further Tax Deduction for Overseas Talent Recruitment Scheme:

  • Singapore Citizens
  • Singapore Permanent Residents (PRs)
  • Employment Pass (P1 and P2) and Personalised Employment Pass (PEP) holders

 

There is no minimum qualifying employment period applicable.

The Further Tax Deduction for Overseas Talent Recruitment Scheme has expired on 30 Sep 2013. Employers can still claim further tax deductions under the scheme, if the eligible expenses are incurred on or before 30 Sep 2013.  Employers can submit their claims together with their income tax return for the financial year in which the eligible expenses are incurred.

Scheme benefits

The following items qualify for tax reductions:


P1 Employment Pass & equivalent*
P2 Employment Pass & equivalent*
Relocation expenses for employee $15,000 (includes recruitment) $5,000
Relocation expenses for spouse $5,000 $5,000
Relocation expenses for unmarried children under 21 years of age $2,500 per child
(maximum of two children)
$2,500 per child
(maximum of two children)
Total cap per employee $25,000 $15,000
Cap per employer per assessment year

$275,000 

* Includes Singapore Citizens and Permanent Residents.

Qualifying recruitment costs:

  1. Employment agency fees
  2. Cost of passage bringing in the prospective employee from abroad for interview, who is subsequently hired; OR the cost of flying the employer overseas to interview the prospective employee who is subsequently hired

Qualifying relocation costs:

  1. One-way passage of the employee, his/her spouse and up to 2 unmarried children below the age of 21 years
  2. Baggage allowance
  3. Temporary accommodation costs

Restrictions

Employers cannot claim further tax deduction if:

  1. they already enjoy government grants, incentives or any other government assistance that offset the recruitment or relocation costs of global talent
  2. the overseas employee is recruited through intra-company transfer. This refers to transfers between "companies in the same group", defined for tax purposes to include subsidiaries and associates

For example: an employee who has worked for Company A in Singapore, before being sent overseas to a related Company B, and was subsequently sent back to Company A, is not eligible for the scheme. An exception would be if the employee had been recruited by and worked for the overseas Company B first, then transferred to Company A in Singapore. In this case, the local company would be able to claim further deduction for the costs of relocating the employee to Singapore only.

Application procedure

Returning Singapore Citizens and Permanent Residents

Prior to filing tax returns, the employer needs to send an pdfapplication form to MOM, along with a photocopy of the NRIC and a detailed employment history/resume of the candidate. The documents should be sent to:

International Manpower Division
Ministry of Manpower
18 Havelock Road
#04-01
Singapore 059764

A letter of confirmation will be issued to the company if it is eligible for further tax deduction.

When filing tax returns, the employer should submit the following documents to the Inland Revenue Authority of Singapore:

  1. A statement from the employer confirming that the claim does not fall within the above-stated restrictions. 
  2. Details and original receipts of the qualifying relocation and/or recruitment expenses
  3. Photocopies of the marriage certificate and birth certificates of the children, if the employer is claiming the relocation expenses incurred on the spouse and children of the employee
  4. Letter of confirmation of eligibility for further tax deduction from MOM

Employment Pass (P1 and P2) holders

After the employee is on the company's payroll, the employer can proceed to claim further tax deduction. The employer is required to submit the following documentary evidence to the Inland Revenue Authority of Singapore when filing their corporate tax returns:

  1. A statement from the employer confirming that the claim does not fall within the above-stated restrictions. 
  2. Details and original receipts of the qualifying relocation and/or recruitment expenses
  3. Photocopies of the marriage certificate and birth certificates of the children, if the employer is claiming the relocation expenses incurred on the spouse and children of the employee
  4. A photocopy of the Employment Pass stamp in the employee's passport or Employment Pass Holder’s Long Term Pass card (whichever is relevant)
  5. Photocopies of the Dependant's Pass stamp in the passports of the employee's spouse and children or the Dependant’s Long Term Pass card (whichever is relevant)

Personalised Employment Pass (PEP) holders

Prior to filing tax returns, the employer need to send an pdfapplication form along with a photocopy of the Long Term Pass card and a detailed employment history/resume of the candidate. The documents should be sent to:

International Manpower Division
Ministry of Manpower
18 Havelock Road
#04-01
Singapore 059764

A letter of confirmation will be issued to the company if it is eligible for further tax deduction.

When filing tax returns, the employer should submit the following documents to the Inland Revenue Authority of Singapore:

  1. A statement from the employer confirming that the claim does not fall within the above-stated restrictions.
  2. Details and original receipts of the qualifying relocation and/or recruitment expenses
  3. Photocopies of the marriage certificate and birth certificates of the children, if the employer is claiming the relocation expenses incurred on the spouse and children of the employee
  4. A photocopy of the Employment Pass stamp in the employee's passport or Employment Pass Holder’s Long Term Pass card (whichever is relevant)
  5. Photocopies of the Dependant's Pass stamp in the passports of the employee's spouse and children or the Dependant’s Long Term Pass card (whichever is relevant)
  6. Letter of confirmation of eligibility for further tax deduction from MOM
Last updated on 23 December 2013 11:49:21