Singapore’s Per Diem Allowances Update
Per diem, which is Latin for “per day” or “for each day” or daily allowance, is a specific amount of money an organisation gives an individual, often an employee, per day to cover living expenses when traveling for work. A per diem can include part or all of the expenses incurred, for example it may exclude accommodation,(for which reimbursement may be available on presentation of receipts, and only cover meals. The Inland Revenue of Singapore (IRAS) recently released the acceptable rates for per diem allowances for countries around the world. Any per diem allowance in excess of these acceptable rates are taxable. These rates are applicable to Singapore-based employees sent overseas for short business trips and whose services rendered overseas are considered as incidental to their employment in Singapore. The acceptable rates determined by IRAS are strictly for Income Tax purpose and the rates do not determine the amount of per diem allowance that the employer wishes to pay their employees.
The rates are applicable on a calendar year basis. For example, if your employee is sent overseas in 2018, see the rates under “2018 Acceptable Rates“. If an employee is paid a per diem allowance that is more than the IRAS acceptable rate for a particular country, the amount in excess of the acceptable rate is taxable in the Year of Assessment (YA) 2019.The following payments do not fall under per diem allowance and are not taxable :
– Overseas accommodation
– Overseas airport transfer
– Traveling expenses between cities for business purpose
– Entertainment expenses for business purpose
The acceptable rates for the following year are published in December so that employers can work out the taxable amount. The rates are applicable for January to December in the following year. Once the rates are published, no changes will be made so that the same rates apply to all employees. If your company pays a higher per diem allowance than the acceptable rates set by IRAS and you think the higher allowance paid to your employees is justifiable, you can inform IRAS of these rates so that IRAS can consider them when reviewing the acceptable rates for the following year. The current per diem rate for Singapore is S$141 which remains unchanged from last year. The rate in Singapore is comparatively high based on the rates offered by it’s closest neighbours Malaysia, which is S$70 and Thailand S$80. Per diem allowance should be a proxy for the actual amount of living expenses that the employee incurs or is likely to incur in the day. The comparison should be reasonable and reflect the consumption pattern of that day. IRAS will accept the number of days determined by the employer according to its HR policy which is to be applied for all employees concerned, so long as the number of days does not exceed the total length of trip.