Form IR21: Employer Obligations for Tax Filing of Foreign Employees in Singapore

When employing foreign talent in Singapore, businesses must take note of certain compliance requirements and one of the most critical being the submission of Form IR21. Commonly referred to as the Tax Clearance form, this is not just another filing exercise; failure to comply may result in penalties or even impact the company’s future work pass applications.

Here’s a quick guide to what employers need to know about Form IR21 and how to stay on the right side of the law.

What is Form IR21?

Form IR21 is the tax clearance form employers must file to inform the Inland Revenue Authority of Singapore (IRAS) that a non-citizen employee (including Singapore PRs) is ceasing employment, leaving the country for more than three months, or leaving the company permanently.

This filing ensures that any outstanding tax liabilities are settled before the employee departs. IRAS will then assess and confirm the amount of tax payable.

When Must Employers File IR21?

The form must be filed:

• At least 1 month before the foreign employee:

  • Ceases employment with the company

  • Leaves Singapore for more than 3 months

  • Is posted overseas permanently

  • Starts a new employment with a different entity

Tip: Even if the employee is transferring within group companies, IRAS still requires an IR21 filing if there’s a change in the employer’s tax ID (UEN).

Key Employer Obligations

1. Withhold All Payments

   • From the date you are aware of the employee’s impending departure or cessation, withhold all payments, including salary, bonuses, allowances, and benefits.

   • The amount withheld must be enough to cover the estimated tax liability.

   • Do not release any payment until you receive a tax clearance directive from IRAS (Directive to Pay or Notification to Release Monies).

2. Submit Form IR21 Online

   • Submission is done electronically via IRAS’ myTax Portal.

   • The form captures income up to the last day of employment and any additional benefits received.

3. Act Promptly

   • Late submissions may attract penalties.

   • More importantly, the employee may be stopped at immigration if tax clearance has not been obtained.

     
     

Exemptions: When IR21 is Not Required

Employers do not need to file Form IR21 if the employee:

• Is a Singapore citizen

• Is a Singapore PR and not leaving Singapore permanently

• Works outside of Singapore and is not physically present in Singapore for more than 183 days in a year

• Has been issued an IR21 waiver for specific scenarios

  
  

✅ Best Practice: Even if you're unsure, submit the IR21 to err on the side of caution or consult a tax professional.

Common Pitfalls to Avoid

• Missing the deadline: Always prepare in advance and don’t wait until the employee’s last week.

• Failing to withhold payment: This is a serious breach and can result in the employer being liable for the employee’s tax.

• Incorrect or incomplete information: Ensure accuracy in income declaration, especially for stock options, bonuses, and housing allowances.

• Assuming transfers within affiliated companies are exempt: Each entity is treated as a separate employer for tax purposes.

  
  

Conclusion

Navigating the compliance landscape for foreign employees can feel complex, but understanding your obligations around tax clearance is crucial. Filing Form IR21 on time and adhering to withholding obligations not only keeps your business compliant but also reinforces your reputation as a responsible employer.

If you're unsure whether IR21 applies to your situation, or if you want help managing the process, don’t hesitate to reach out. At Account-Ink, we specialise in corporate and employment compliance so you can focus on running your business, while we handle the rest.