What is foreign worker levy?

The foreign worker levy is a government-mandated fee employers are required to pay when they hire a foreign worker. The goal of these fees is to promote the advancement of local talent, rather than looking for talent abroad.

The amount that needs to be paid for these fees will vary, depending on factors like:

• Employment duration
• Local regulations
• Industry
• Exchange rates
• Nationality
• Quotas and limitations

Overall, companies that hire foreign employees need to keep track of these levies and understand the costs and requirements behind them. Failure to do so can result in fees and penalties, putting a damper on any growth plans.

Different types of foreign worker levies

Work permit levy: A fee that must be paid for each foreign employee, covering the cost of processing the work permit.

Quota levy: Employers must pay this fine when the number of foreign workers they’ve hired is over a quota set by the government.

Skills development levy: Employers are required to pay this fee to promote local skills and education programs as a way to even out the fact that they’ve hired talent from abroad, rather than turning to local candidates.

Sector-specific levy: These levies are for sectors that are more prone to rely on foreign labor, like construction and hospitality.

Time-based levy: This fee is calculated based on how long the foreign worker has been under employment.

How much is the foreign worker levy?

Foreign worker levy amounts vary by country, industry, and the worker’s qualifications. Here are a few examples:

Singapore

The levy for the first foreign domestic worker is S$300 per month and S$450 per month for additional workers. The levy for S Pass workers depends on the tier and quota percentage of the workforce.

West Malaysia

The levy for manufacturing and construction is RM 1850 per year and RM 640 per year for agriculture and plantation.

Saudi Arabia

The monthly levy for employers with an Iqama residence visa and work permit is SAR 800, about US$213.

How is the foreign worker levy calculated?

Foreign worker levy is calculated based on the type of industry, employment sector, the nationality and skill level of the foreign worker. Levy rates are determined by government regulations.

How much is the maid levy per month?

In Singapore, the monthly levy for a foreign domestic worker is $300 for the first worker and $450 for each additional hire. For eligible households, Singapore provides a concessionary rate of $60 per month.

This levy covers the costs of training and supporting foreign domestic workers. If a child in the household is under 16 or 67 and older, the household receives a concession.

Residents can apply for the levy subsidy online or with the Agency for Integrated Care (AIC) with their bank account details, proof of their inability to pay the full amount, and proof of personal income.

Additional costs of hiring a maid in Singapore include:

• Monthly salary of at least S$550
• Security bond, medical, and accident insurance of S$250–S$300
• 6-monthly medical examinations of S$40 each time
• Food for the worker
• Traveling and necessities of S$100 per month

Compliance requirements for a foreign worker levy

Companies hiring foreign talent or transferring employees abroad must comply with the immigration and employment regulations of the country of interest.

Employers are responsible for complying with foreign worker levy regulations, which include:

• Registration: Registering with the government authorities and applying for the necessary permits or licenses to legally employ foreign workers.
• Levy payment: Calculating and remitting foreign worker levy payments accurately and according to set schedules.
• Recordkeeping: Maintaining accurate records of foreign worker employment, levy payments, permits, and other documentation to prove compliance and abide by audits or inspections.

Managing foreign worker levies with a payment execution platform

A company hiring from different countries may face multiple levies that need processing. A strong global payment execution platform can ease the strain, offering expertise in foreign worker levies in multiple jurisdictions, staying up to date with changing requirements, monitoring and auditing global payroll operations, and offering compliance management features.