Singapore tax clearance for foreigners made simple (2025)

If you are a business owner or accountant for your company in Singapore, you need to know about tax clearance for foreign employees. Failing to do so can lead to penalties for the company.

This guide will explain tax clearance, who needs it, and how to do it correctly with our tax expert guidance.

1. 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).

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

2.1. 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.

2.2. 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.

3. 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.

4. How to file the form IR21 for tax clearance?

4.1. 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.

4.2. 6-step process to file forms IR21 to avoid penalties (Easy and straightforward)

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

5. 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)

6. 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.

If you are thinking about expanding overseas with Singapore to be your company headquarters, we can help you:

• Register a company in Singapore;
• Open a corporate bank account in Singapore with a 99% success rate;
• Choose the right company types for tax optimization in Singapore;
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• Handle all your tax accounting needs, timely annual filings, auditing, and more.

7. 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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