In Singapore, businesses are responsible for the Skills Development Levy (SDL) in addition to payroll and CPF contributions. The SDL is a compulsory levy to help fund Singapore’s long-term goal of building a future-ready workforce.
SDL contributions support SkillsFuture Singapore (SSG) initiatives that fund training subsidies, development grants, and national upskilling programmes under Singapore’s broader workforce transformation strategy. Understanding your SDL obligations is necessary for your business, not just to be compliant, but also to unlock workforce development opportunities and cost savings in training support.
In this guide, we will break down everything employers need to know about SDL from who needs to pay, how to calculate it, payment methods, exemptions, and how businesses can maximize its benefits.
Content Outline
Key Summary
What is SDL and Who Must Pay It
All employers in Singapore must contribute the Skills Development Levy (SDL) for every employee, regardless of nationality or CPF eligibility.
SDL Calculation and Rates
SDL is calculated at 0.25% of an employee’s monthly remuneration, with a minimum of S$2 and a cap of S$11.25 per employee.
Payment Methods and Deadlines
SDL must be paid monthly by the 14th of the following month via CPF e-Submit@web, SDL e-payment portal, AXS stations, or cheque submission.
Exemptions and Refunds
Certain employees, like those on overseas postings or students under internships, are exempt from SDL, and erroneous payments can be refunded.
Strategic Business Benefits
Paying SDL enables employers to access SkillsFuture grants, reduce training costs, enhance employee skills, and improve retention.
What is the Skills Development Levy (SDL)?
Skills Development Levy (SDL) is a mandatory monthly contribution imposed on employers under the Skills Development Levy Act. It is collected and regulated by SkillsFuture Singapore (SSG) and is imposed on all employers, including private entities and statutory boards, for foreign and local employees.
Unlike CPF contributions, SDL is not linked to any employee benefit scheme or statutory fund. Although employers are not allowed to utilize government training grants, they are still required by law to make SDL contributions. The collected funds are deposited into the Skills Development Fund (SDF) that supports continuing education and training (CET) courses for the skill upgrading of the local workforce.
SDL is a government-backed mechanism to allow employers to invest in human capital, enhance workforce skills, and build a robust, competitive economy. By making regular contributions, employers are able to access subsidies, training credits, and enterprise grants to recover the cost of employee upskilling.
Who Needs to Pay the SDL?
Under the Skills Development Levy Act, all employers in Singapore are required to pay SDL for every employee, regardless of nationality or job scope. This includes:
- Full-time and part-time local employees
- Foreign employees holding valid work passes
- Temporary or contract staff (as long as they are on the company’s payroll)
The SDL is payable even if the employee does not receive CPF contributions for instance, expatriates or temporary workers are not eligible for CPF. Additionally, whether or not you choose to do training assistance schemes like SkillsFuture Enterprise Credit, your SDL obligation remains mandatory.
How Much is the SDL Contribution?
The Skills Development Levy rate is fixed at 0.25% of each employee’s monthly remuneration, with a minimum of S$2 and a maximum cap of S$11.25 per employee per month.
What Counts as “Remuneration”?
Remuneration includes basic salary, overtime pay, commissions, bonuses, and any other payments made to the employee excluding employer CPF contributions.
SDL Contribution Table (Based on Monthly Salary)
| Monthly Remuneration | SDL Payable per month |
| Below S$800 | S$2 (minimum levy) |
| S$800 to S$4,500 | 0.25% of remuneration |
| Above S$4,500 | S$11.25 (maximum levy) |
By understanding these thresholds, businesses can budget accurately and avoid underpayment, which may lead to penalties or audit flags.
How to Calculate Your SDL: Step-by-Step Guide
SDL calculations are straightforward once you understand the remuneration and contribution rate.
SDL Calculation Formula:
SDL = 0.25% × Employee’s Monthly Remuneration
Subject to a minimum of S$2 and a maximum of S$11.25 per employee.
Examples:
1. Employee A earns S$600/month:
- 0.25% × S$600 = S$1.50 → Minimum levy applies
- SDL payable: S$2
2. Employee B earns S$3,000/month:
- 0.25% × S$3,000 = S$7.50
- SDL payable: S$7.50
3. Employee C earns S$6,000/month:
- 0.25% × S$6,000 = S$15 → Cap applies
- SDL payable: S$11.25
Use the official SDL Calculator on the SkillsFuture Singapore website for accurate and quick computation across your workforce.
How to Make SDL Payments and Submit Returns
Employers must pay the Skills Development Levy (SDL) monthly, even if no CPF contributions are made. Timely and accurate payments are essential to avoid penalties and ensure access to training grants under SkillsFuture Singapore.
Payment Methods for SDL
| Payment Method | Description | Recommended For |
| CPF e-Submit@web | – Integrated with CPF submissions- Auto-calculates SDL based on declared wages | Businesses already filing monthly CPF contributions |
| AXS Stations (AXS e-Services) | – Walk-in kiosks available islandwide- No need for a CPF account | Small businesses or employers without CPF accounts |
| SDL Website E-payment | – Direct submission via SDL portal- Supports PayNow, GIRO, and internet banking | Employers preferring convenient online payment methods |
| Cheque + SDL Return Form | – Manual option- Requires download and submission of SDL Return Form with cheque | Companies with non-digital processes or foreign-based companies |
SDL Payment Deadline
All SDL contributions are due by the 14th of the following month after the wage period. For example, SDL for May must be paid by 14 June.
Penalties for Late Payment
Failing to make timely SDL payments can result in:
- Late payment interest charges
- Enforcement actions or audits by CPF Board or SSG
- Disqualification from training grants or government support schemes
To stay compliant, always verify submission confirmation and keep SDL receipts for at least 5 years for audit purposes.
SDL Exemptions and Refunds
While SDL applies broadly, there are certain cases where employers may be exempt from making contributions, or may be eligible for a refund.
Who Is Exempt from Paying SDL?
You are not required to pay SDL for:
- Employees on overseas posting who do not work in Singapore during the wage month
- Employees under CPF exemption (e.g. foreign diplomats or international organisation staff)
- Students or interns employed temporarily under school programs
- Self-employed persons and contractors (not on payroll)
- Company directors not receiving a salary
How to Apply for a Refund
If SDL was paid in error (e.g., for an exempt employee or duplicate payment), employers can apply for a refund by:
- Submitting a Refund Request Form to SkillsFuture Singapore
- Attaching relevant supporting documents (e.g., employment contract, CPF exemption letter)
- Requesting the refund within 12 months from the date of overpayment
Refunds will be reviewed and processed on a case-by-case basis.
Common Exemption Misconceptions
- “No CPF = No SDL”: This is incorrect. Even if no CPF is due (e.g. for foreign workers), SDL is still mandatory unless the worker is explicitly exempt.
- “Short-term workers don’t require SDL”: All workers on payroll, regardless of duration, are covered unless they meet exemption criteria.
SDL and Singapore Tax Implications
Understanding the tax treatment of the Skills Development Levy (SDL) is crucial for effective financial planning and accurate corporate tax filing in Singapore.
Is SDL Tax-Deductible?
Yes. SDL contributions are tax-deductible as part of your company’s business expenses under Singapore’s corporate tax framework. Since SDL is a statutory levy directly tied to workforce development, it qualifies as a deductible cost incurred in the production of income.
Employers should ensure SDL contributions are clearly categorized under staff costs when filing Form C/C-S. Proper classification avoids under-reporting and ensures the full benefit of allowable deductions is claimed.
This means you can include SDL contributions in your deductible staff costs, alongside salaries, CPF contributions, and training expenses, when preparing your company’s Form C-S or Form C for corporate income tax.
Impact on Corporate Tax Filing
When filing taxes:
- Record SDL under “Employee Benefits” or “Staff Welfare & Training”
- Ensure you reconcile SDL payments with payroll records for accurate reporting
- Maintain proper documentation (payment confirmations and SDL return copies)
Failing to include SDL may result in under-claimed deductions and increase your company’s effective tax liability unnecessarily.
Filing SDL-Related Claims and Deductions
If your company utilizes SkillsFuture Enterprise Credits (SFEC) or receives training subsidies, ensure that:
- You net off subsidies when claiming training expenses
- You do not double-claim SDL and training support under different expense categories
Always work with your accountant or tax agent to classify SDL-related costs correctly in your tax computations.
Compliance, Penalties & Audit Risks
Ensuring SDL compliance is not just about avoiding penalties, it also protects your business reputation and access to SkillsFuture training support.
What Happens If You Don’t Pay SDL?
Not paying or underpayment of SDL can lead to:
- Late payment penalties and fines
- Legal enforcement by CPF Board
- Loss of eligibility for SkillsFuture training subsidies or grants
- Potential interest charges on unpaid amounts
Deliberate non-compliance may even result in prosecution under the Skills Development Levy Act.
CPF Board Enforcement and Audit Checks
The CPF Board oversees SDL collection and conducts periodic compliance audits. During audits, your business may be asked to:
- Submit monthly payroll records
- Provide evidence of salary disbursement and SDL computation
- Show proof of timely payment and correct levy amounts
Discrepancies can trigger further reviews or even back-pay assessments with interest.
Record-Keeping and Documentation Tips
Good documentation not only ensures compliance but also simplifies tax filing and subsidy claims. To stay audit-ready and compliant:
- Keep SDL payment receipts for at least 5 years
- Keep a record of employee salary details and CPF submissions
- Archive SDL return forms and correspondence with SkillsFuture Singapore
- Ensure payroll software or service provider applies correct SDL logic
Strategic Benefits of Paying SDL
Paying the Skills Development Levy (SDL) is more than a compliance obligation. It is a strategic investment in your workforce and long-term business growth. Here’s how employers can gain value beyond regulatory fulfilment:
1. Access to SkillsFuture Enterprise Credit and Training Subsidies
By contributing to SDL, employers gain eligibility for a wide range of SkillsFuture Enterprise Credit (SFEC) and training grant schemes. These include:
- Up to 90% course fee subsidies for approved training programmes
- Grants for workforce transformation and digitalisation efforts
- Co-funding support for sending employees to Continuing Education and Training (CET) centres
This financial support can significantly reduce training costs while helping you build a future-ready workforce.
2. Enhancing Workforce Skills and Competitiveness
Regular investment in employee development improves:
- Technical skill
- Productivity and innovation
- Organisational resilience and adaptability
With government-backed training initiatives powered by SDL, businesses can stay competitive in a fast-evolving global economy.
3. Boosting Employee Morale and Retention
Employees value companies that invest in their career growth. Through SDL-funded programmes:
- Staff feel more motivated and empowered
- Companies develop a stronger employer brand
- Retention rates improve as employees see long-term prospects in the organisation
Overall, SDL enables businesses to create a culture of continuous learning, strengthening both employee satisfaction and company performance.
Conclusion
The Skills Development Levy (SDL) is a gateway for Singapore businesses to invest in workforce development, access government-backed training support, and future-proof their operations. By understanding who needs to pay, how to calculate and submit SDL contributions, and the strategic advantages tied to compliance, employers can turn this levy into a valuable tool for upskilling their teams, improving employee retention, and unlocking subsidies that ease training costs. Staying compliant with SDL not only avoids penalties but also empowers your business to build a more competitive and resilient workforce in 2025 and beyond.
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