Meaning
Statutory notification requirements in Singapore mandate that employers withhold payment to departing non-citizen employees until tax liabilities are settled. Filing a form ir21 tax clearance is the responsibility of the employer whenever a foreign worker leaves the company or the country for more than three months. The company must hold all monies due to the employee from the day they are notified of the departure.
Filing Obligation
Timely submission of the paperwork to the Inland Revenue Authority of Singapore is required at least one month before the employee ceases work. When preparing a form ir21 tax clearance, the company lists all income earned during the current and previous years including bonuses, stock option gains and allowances that may not have been fully taxed yet. The employer must be precise with these figures because any discrepancy can delay the clearance process and lead to further enquiries from the government.
Payment Suspension
Withholding the final salary and any other payouts ensures that the worker does not leave the jurisdiction with unpaid tax debts. The employer remains legally liable for the tax if it fails to perform this duty under the form ir21 tax clearance rules. These funds are only released to the employee once the tax office sends a directive stating the exact amount of tax to be deducted.
Final Settlement
Processing the assessment usually takes the tax authority around seven working days. Once the form ir21 tax clearance process is finished, the employer pays the tax and gives the remainder to the worker.
