Per Diem Allowance - Singapore

Per Diem Allowance - Singapore | Bestar

Singapore Per Diem Allowance Explained

The per diem allowance in Singapore refers to a daily allowance provided to employees to cover living expenses during business travel, whether within Singapore or overseas. These expenses typically include meals, local transportation, and other incidentals like laundry.

Here's a breakdown of key aspects:

Taxation:

• Acceptable Rates: The Inland Revenue Authority of Singapore (IRAS) sets "acceptable rates" for per diem allowances for various countries annually. These rates are based on the cost of living in those locations.

• Taxable Excess: If an employer pays a per diem allowance that exceeds the IRAS acceptable rate for a specific country, the excess amount is considered taxable income for the employee. This excess must be reported in the employee's Form IR8A.

• Non-Taxable Items: Certain business travel expenses are not considered part of the per diem allowance and are non-taxable when reimbursed based on actual expenses. These include:

  • Overseas accommodation

  • Overseas airport transfers

  • Travel expenses between cities for business purposes

  • Business-related entertainment expenses 

2025 IRAS Acceptable Rates:

• IRAS has published the acceptable per diem rates for 2025. For employees based in Singapore traveling overseas, the rates vary by country. For overseas employees traveling into Singapore for business for 60 days or less in a year, the acceptable rate is S$160 per day.

• If the per diem allowance paid is less than or equal to the IRAS acceptable rate, it is not taxable and does not need to be reported in Form IR8A.

Examples of 2025 Acceptable Rates (for Singapore-based employees traveling to):

• Australia: S$135

• Canada: S$160

• China: S$95

• France: S$155

• Germany: S$150

• Hong Kong: S$105

• India: S$110

• Indonesia: S$145

• Japan: S$170

• Malaysia: S$70

• Thailand: S$110

• United Kingdom: S$190

• United States: S$160

Important Considerations:

• The IRAS acceptable rates are strictly for income tax purposes and do not dictate the amount an employer chooses to pay as a per diem allowance.

• Employers can pay more than the acceptable rate, but the excess will be taxable.

• If a company believes its higher per diem rates are justifiable due to the cost of living, they can submit a report from a consulting firm with supporting evidence to IRAS for consideration when reviewing future rates. Employee's personal experiences are not accepted as justification.

• The number of days for the per diem allowance should align with the company's HR policy and not exceed the total length of the business trip.

• If full meals or accommodation are provided by the employer, the per diem allowance should be adjusted accordingly to reflect the reduced expenses for the employee.

In summary, while there isn't a single "per diem allowance" amount for Singapore, IRAS sets daily acceptable rates for tax purposes, which vary depending on the travel destination. Employers need to be aware of these rates to correctly manage the tax implications for their employees' business travel allowances.

How Bestar can Help

When it comes to the per diem allowance in Singapore, Bestar can offer valuable assistance, depending on your specific needs. Here's how Bestar can help:

• Policy Development: Bestar can help organizations develop clear and compliant per diem policies that align with local regulations (like IRAS guidelines) and industry best practices. We can define eligibility criteria, allowance rates based on travel destinations, and procedures for claiming and processing per diem.   

• Implementation and Communication: We can assist in implementing the per diem policy effectively within the organization, ensuring clear communication to employees about their entitlements and responsibilities. This includes training employees on the policy and addressing their queries.

• Compliance: Bestar stays updated on changes in IRAS regulations regarding per diem allowances and can ensure that the company's policies and practices remain compliant to avoid tax issues for both the organization and its employees.

• Benchmarking: We can conduct benchmarking studies to compare the company's per diem rates with industry standards and ensure they are competitive and fair.

• Understanding IRAS Regulations: Bestar possesses in-depth knowledge of the Inland Revenue Authority of Singapore's (IRAS) guidelines on per diem allowances, including the acceptable rates for various countries and the taxability of excess amounts.

• Compliance and Reporting: We can advise on the correct tax treatment of per diem allowances, ensuring accurate reporting in employee income tax forms (Form IR8A) and preventing potential tax penalties.

• Structuring Per Diem: Bestar can help structure the per diem policy in a tax-efficient manner, ensuring that allowances are within the acceptable limits to minimize taxable income for employees.

• Handling Audits: In case of tax audits, Bestar can represent the company and provide the necessary documentation to support the per diem allowance practices.

• Budgeting and Forecasting: Bestar can help organizations budget for travel expenses, including per diem allowances, and forecast future costs based on travel patterns and policy guidelines.   

• Expense Management: We can establish efficient processes for managing and tracking per diem expenses, ensuring proper documentation and preventing overpayments or fraudulent claims.

• Payment Processing: Bestar is responsible for the timely and accurate disbursement of per diem allowances to employees.

• Cost Control: We can analyze per diem spending patterns and identify opportunities for cost optimization without compromising employee well-being or compliance.

  
  

In summary, engaging Bestar can help with:

• Developing compliant and effective per diem policies.

• Ensuring adherence to IRAS regulations and minimizing tax liabilities.

• Managing budgets and controlling travel expenses.

• Streamlining the process of disbursing and tracking per diem allowances.

• Providing expert advice and guidance on best practices.

By leveraging the expertise of Bestar, organizations in Singapore can effectively manage their per diem allowances, ensuring fairness to employees and compliance with local tax laws.

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