Singapore tax clearance: How to file for foreigners (2026)

Your foreign employee is leaving Singapore, and as an employer, you, as a employer,  need to handle their tax clearance.

But when you tell them their salary needs to be withheld, you may get a question like this:

“Why does my employer need to withhold my salary? What about my rent and daily expenses? How am I supposed to afford them?”

A genuine question from a emloyee about why their salary needs to be withheld

It’s a reasonable question. IR21 tax clearance requires employers to withhold the employee’s monies until IRAS confirms that their tax obligations have been settled.

That means employers need to know when IR21 is required, how much to withhold, and what happens during the clearance process, while employees need to understand why their salary is being withheld and how this affects them.

In this guide, our Singapore tax experts at Global Link Asia Consulting ("GLAC") explains who needs IR21, when to file it, how to calculate the amount to withhold, and how to file tax clearance.

Let's get into it.

1. IRAS tax clearance calculator and Form IR21

Before you dive into the guide below, there are two official IRAS tools you should keep on hand. They save you from guesswork and reduce the risk of filing errors.

1.1. Tax clearance calculator

This is a downloadable spreadsheet published by IRAS. Its job is simple. It tells you, in a few clicks, whether your foreign employee actually needs tax clearance or falls under one of the exempted scenarios (short-term employment, low annual income, internal transfer, and so on).

• You can download the latest calculator via this link here: IRAS tax clearance calculator;
• Or you can go to the official IRAS website to download the temaplte: Tax clearance for employees.

To use the calculator, we recommend you:

• Download the Tax Clearance Calculator from the IRAS website;
• Enter your employee's basic details: start date, end date and a Yes or No answer for wether or not the annual total income is more than 21,000 SGD
• Check the result the calculator generates. 
  • If it confirms tax clearance is required, move on to Form IR21. 
  • If not, you only need to report the employee's income via Form IR8A or AIS by 1 March of the following year.

Running this check first prevents two common mistakes: filing Form IR21 when it isn't needed, or worse, missing a required filing and facing a fine of up to $5,000.

1.2. Form IR21 and its explanatory notes

Form IR21 is the actual tax clearance form you submit to IRAS. You can choose to e-Filing via myTax PortalI (Please follow our 6-step process below) or you can do paper filing.

For paper filing, it is available in two formats:

• Form IR21 in Word format (for reference or manual filing);
• Form IR21 in PDF format (editable format for preparing your draft before e-filing ).

Alongside the form, IRAS also provides the Form IR21 Explanatory Notes.

We recommend you keep this document open while filling in Form IR21, since it explains each field line by line,  from the employee's tax reference number to how to declare share options, bonuses, and other taxable benefits.

This reduces the chance of your form being returned as incomplete, which is one of the main causes of processing delays.

2. How salary witholding works for tax clearance in Singapore (Important)

As an employer, tax clearance is a legal obligation you must follow, but for your employee, it is often something they have never encountered before. 

If you withhold their salary, bonus, or leave pay without explaining why, you may end up with a confused or frustrated employee who feels blindsided at the exact moment they are trying to plan their move, their next job, or their finances (Pay their bills, their rent, and others fees).

We recommend you proactively notify your employee as soon as you become aware of their cessation of employment, overseas posting, or departure from Singapore.

What you should communicate to your employee

• Explain that tax clearance (Form IR21) is a mandatory IRAS requirement, not a company policy or a delay tactic on your part at the start of their employment.
• Clarify exactly what will be withheld: salary, bonus, overtime pay, leave pay, allowances, gratuities, and any lump sum payments due to them.
• Give them a realistic timeline: Form IR21 processing typically takes around 21 days (faster if e-filed), and this may extend if IRAS requires additional information.
• Advise them to set aside 1 to 2 months of living expenses in advance, since their monies will remain withheld until IRAS issues the Clearance Directive.
• Let them know they can check the status of their tax clearance and view their tax bill via myTax Portal using their Singpass.

Suppose your employee resigns on 14 August 2026, with a last working day of 13 October 2026. You are required to file Form IR21 by 14 September 2026, and from that point, their final salary, any unused leave pay, and bonus will be withheld until IRAS releases the Clearance Directive.

If you inform your employee of this on the day they hand in their resignation,  rather than a week before their last paycheck is due,  they have roughly two months to prepare financially, instead of discovering the shortfall at the worst possible time.

Being upfront about this requirement early does two things for you as an employer:

1. It reduces the number of anxious follow-up questions from your employee during an already busy offboarding period, and;
2. It protects your company's reputation as a fair and transparent employer,  even when you are simply following the law.

3. What is tax clearance in Singapore?

Tax clearance (Taxation clearing) is the mandatory process where an employer must ensure their foreign employee (Work Pass Holder) has paid all their taxes before leaving Singapore or changing jobs

The employer must file for tax clearance  (IR21 form) and withhold all payments to the employee until tax clearance is obtained from the Inland Revenue Authority of Singapore (IRAS).

4. In what cases do business owners need to file for tax clearance?

4.1. Scenarios required for tax clearance

If you as a business owner have a foreign employee working in Singapore, you may need to go through tax clearance at some point. 

This applies to:

1. Non-Singapore citizens leaving Singapore for an extended period or permanently;
2. Foreign employees ceasing employment with their company;
3. Employees starting an overseas posting or assignment;
4. Singapore Permanent Residents (PRs) leaving the country permanently.

4.2. Scenarios not required for tax clearance

Tax clearance is not required in certain situations. 

If your employee falls under any of these categories, you do not need to file Form IR21. However, you must still submit your employment income to IRAS via Form IR8A or Auto Inclusion Scheme (AIS) by 1st March of the following year.

For foreign employees

1. Employees working in Singapore for 60 days or less (except company directors, public entertainers, or professionals).
2. Employees working for 183 days and earning less than SGD $21,000 annually. (except company directors, public entertainers, or professionals).
3. Employees transferred within Singapore 
4. Employees temporarily away for 3 to 6 months from Singapore for training, business trips or short-term overseas posting

For Singapore Citizens & Permanent Residents (PRs) 

1. Singapore Citizens are exempt. Singapore PRs who are not leaving Singapore permanently after stopping work.
2. Employers must obtain a Letter of Undertaking (LOU) from the employee confirming they will not leave Singapore permanently.

Exception: If the PR employee is going on an overseas posting, tax clearance is required.

5. What is the role of IRAS in your employees’ tax clearance? 

The Inland Revenue Authority of Singapore (IRAS) is responsible for overseeing the tax clearance process to ensure that foreign employees settle their taxes before leaving Singapore.

Once the employers file the form IR21, IRAS will 

1. Review the employee’s taxable income, deductions, and allowances to calculate the final tax amount;
2.  issue a Tax Clearance Directive (showing the exact amount of tax due). Employers must withhold payment to the employee until taxes are cleared;
3. Update the tax records to confirm the taxation clearing.

6. When do you need to file form IR21?

You, as an employer, should submit Form IR21 at least one month before the employee’s last working day. The processing time for Form IR21 from IRAS part can take time, depending on how it is submitted.

• E-filing via myTax Portal – 7 working days (Recommended method);
• Paper filing at 55 Newton Road, Singapore 307987,– More than 21 days (may cause delays);
• Amended Form IR21 if you have updates after submitting the original form.

In addition, you must file the Form IR21 for each foreign employee.

7. How to file the form IR21 for tax clearance? (Easy and straightforward 6-step process

To make the taxation clearing process easy to do, our experts have prepared an easy-to-follow process below

8. Consequences of late or non-payment of taxes for tax clearance

If taxes are not paid on time, IRAS may take the following actions:

What happens if the tax payment is higher than what I calculated?
Even if you have filed an objection, you must still pay the tax by the due date. When IRAS later revises the tax amount, any excess payment will be refunded.

1.  Charge a 5% late payment penalty if payment is overdue.
2.  Appoint agents (e.g., your bank, tenant, or lawyer) to recover the amount.
3.  Issue a Travel Restriction Order (TRO) for sole proprietors or partners, preventing them from leaving Singapore.
4.  Take legal action to recover unpaid taxes.

For example, If the payment is not made on time, the total amount owed becomes $5,250 ($5,000 + $250 penalty)

9. How can we help you file your tax clearance correctly and timely?

With 10+ years of expertise, GLAC ensures that your tax clearance process is handled correctly and on time, so you can focus on running your business. Here’s how we can assist:

We can 

• Handle everything from Form IR21 submission to liaising with IRAS.
• Calculate your employee tax to pay back to IRAS correctly.
• Maximize tax savings with expert advice on allowances, exemptions, and deductions. (Recommended)
• Get your Form IR21 e-filed through myTax Portal for faster approval.
• Ensure full compliance with Singapore tax laws, reducing risks of audits or disputes.
• Track your tax clearance status with our team’s real-time updates and notifications.

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• Register a company in Singapore;
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10. FAQs about  Singapore tax clearance

We offer a comprehensive range of accounting and tax services for Singaporean companies. Our services include:

• Tax Consulting including corporate income tax, GST tax, contractor tax, and more.
• Monthly/Annual Tax Accounting services in accordance with Singapore accounting standards (SFRS).
• QuickBooks Consulting and Licensing.
• Corporate Income Tax Return Preparation
• GST Tax Return Preparation.

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