Foreign worker levy increases deferred for marine shipyard, process sectors

IMPACT – MEDIUM

What is the change? Increases to foreign worker levies in the marine shipyard and process sectors will be deferred for another year, Singapore Minister of Finance Heng Swee Keat said this week. Foreign worker levies will remain unchanged for all other sectors as well.

What does the change mean? The basic-tier foreign worker levy rate (R2) for the marine shipyard and process sectors will remain at 400 and 450 Singapore dollars, respectively (about US$303 and US$341). Levy rates were originally scheduled to increase July 1 by between 50 and 100 Singapore dollars. Foreign worker levy rates for all other sectors will remain unchanged until at least July 1, 2019. Rate changes for 2019 will be announced next year.

• Implementation time frame: Ongoing.
• Visas/permits affected: Work permits in the construction and services sectors; S Passes.
• Who is affected: Employers, work permit holders in the construction and services sectors, S Pass holders.
• Next Steps: Affected companies should confirm that they comply with the current levies.

Background: In 2016, Singapore placed a one-year freeze on levy increases in the marine and process sectors because of a reduction of work permit holders in those sectors. The finance minister released a budget proposal this week that pushes off the increases at least one more year.

BAL Analysis: Singaporean officials continue to stop planned levy increases in sectors where the number of work permit holders has declined. The Ministry of Manpower’s Labour Market Report 2017 showed the first decline in total employment in nearly 15 years and attributed the decline to lower numbers of foreign work permit holders in the marine and construction industries. Employers can plan on levies remaining the same until at least July 1, 2019.

This alert has been provided by the BAL Global Practice group in Singapore. For additional information, please contact singapore@bal.com.

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