Tax Clearance and IR21 for Departing Work Pass Holders

Who decides what: IRAS and MOM

Two agencies are involved and they are not interchangeable. The Inland Revenue Authority of Singapore is the authority on tax clearance, and sets the rules on Form IR21, the one-month notice, the withholding of monies and the consequences of late filing. The Ministry of Manpower is the authority on the work pass, and sets the cancellation deadline, the repatriation duties, and the Short-Term Visit Pass or Special Pass that gives the departing employee a lawful stay while they arrange to leave.

Employers run into difficulty when they treat one agency’s deadline as covering the other. It does not. Both apply, at different points in the departure.

When tax clearance is required

IRAS requires tax clearance when a non-Singapore Citizen employee does any of the following:

• Ceases employment with you in Singapore,
• Goes on an overseas posting, or
• Plans to leave Singapore for more than three months.

IRAS states that this applies to all work pass holders, naming the Overseas Networks and Expertise Pass and the Personalised Employment Pass among them. An Employment Pass holder, an S Pass holder and a Work Permit holder are all within scope, subject to the exemptions below. Two duties follow: notify IRAS at least one month in advance, and withhold all monies due to the employee from the date you become aware of the impending cessation or departure.

When it is not required

IRAS publishes a list of categories where clearance is not needed. Where an employee falls into one you do not file Form IR21, but you must still report their employment income through Form IR8A or the Auto-Inclusion Scheme by 1 March of the following year.

Table 1. When tax clearance is not required

Category	Condition
Singapore Citizens	Always outside the tax clearance process
Singapore Permanent Residents	Where they are not leaving Singapore permanently after ceasing employment. Obtain a Letter of Undertaking from the employee and keep it on file
Non-citizen, Scenario 1	Worked 60 days or less in a calendar year. Does not apply to a board director, public entertainer or professional
Non-citizen, Scenario 2	Worked 183 days or more in a calendar year and earned less than S$21,000 annually
Non-citizen, Scenario 3	Worked 183 days or more across a continuous period straddling two years and earned less than S$21,000 annually. Applies to foreign employees who entered Singapore on or after 1 January 2007, and not to directors, public entertainers or those exercising a profession or vocation
Non-citizen, Scenario 4	Worked three continuous years or more and earned less than S$21,000 annually
Internal transfers	Transferred to another company in Singapore because of a merger, takeover, restructuring or posting within the same group. Notify IRAS through myTax Mail using the Waiver of Tax Clearance Template
Short absences	Away from Singapore for three to six months for training, business, or a qualifying overseas posting

Scenarios 1 to 4 carry a further condition. They only apply where the employee has not previously been employed by another employer in Singapore within the year of cessation or the year before it. If you do not know the employee’s past employment record, IRAS advises e-filing the Form IR21 anyway, because myTax Portal gives an immediate online notification if clearance turns out not to be required.

The overseas posting exemption has three cumulative conditions: the period away does not exceed six months, the employee returns to work for the same employer and continues to hold a valid work pass under that employer while away, and the Singapore employer continues to pay their remuneration. It applies to postings on or after 1 January 2016 that are incidental to the Singapore employment. Where the overseas services are not incidental, clearance is still required. The SPR concession likewise does not extend to an SPR employee on an overseas posting or overseas employment unless those conditions are met.

The duty to withhold

From the date you become aware that an employee is leaving, you must withhold all monies due to them. IRAS lists overtime pay, leave pay, allowances, reimbursements, gratuities and lump sum payments among them.

If you cannot withhold everything, give IRAS the reason in the Form IR21. If you release monies without doing so, you may be held liable for the tax the employee owes. That is the practical risk in this exercise, and it falls on the company rather than on the departing employee. Where additional income becomes payable after the original filing, file an Additional or Amended Form IR21 and obtain further clearance before releasing it, rather than reporting it through Form IR8A the following year.

What goes into the form

Include income earned in the year of cessation or departure, and income earned in the preceding year where that has not already reached IRAS through the Auto-Inclusion Scheme by the time of clearance.

A few items behave in ways employers do not expect. Salary in lieu of notice is taxable, and so is a gratuity for past services payable at the end of a contract. Severance that genuinely constitutes compensation for loss of office may not be, and in a retrenchment exercise each component should be assessed and declared separately. Where the employee holds unexercised share options or unvested share awards, including awards under selling restrictions, the deemed exercise rule treats them as having derived gains at the point of clearance.

Filing Form IR21

File at least one month before the employee ceases work for you in Singapore, starts an overseas posting, or leaves Singapore for any period exceeding three months. Filing can be done electronically through myTax Portal, which requires Corppass authorisation, or on paper by post. Where the Form IR21 has been filed, you do not also submit that employee’s income through Form IR8A or the Auto-Inclusion Scheme.

Table 2. Processing times and payment deadlines

Stage	Time
IRAS processes an e-filed Form IR21	Within 7 working days
IRAS processes a paper Form IR21	Within 21 days
Electronic copy of the clearance directive at myTax Portal	Within 3 working days of processing
Posted clearance directive	Within 5 to 7 working days
Payment under a Directive to Pay Tax	Within 10 days of the date of the directive

Processing may take longer where the information is incomplete or IRAS needs clarification, which is the usual reason a departure timeline slips.

The clearance directive

Clearance produces one of two outcomes. A Directive to Pay Tax tells you how much of the withheld money to remit to IRAS, payable within 10 days of the date of the directive. A Notification to Release Monies tells you to release the withheld sum to the employee. One caution: if you have submitted an Amended or Additional Form IR21, do not release the withheld monies until you receive a further directive in respect of that form.

The employee receives their own tax bill by post and can view it at myTax Portal. If the amount withheld does not cover the tax, they are asked to pay the balance, and it helps if their mailing and email addresses are up to date before they leave.

If clearance is late or not sought

Failure to file Form IR21 by the due date is an offence. IRAS may offer to compound it or summon the employer, including a sole proprietor, partner or director, to court. A composition amount not exceeding S$5,000 for each offence may be offered depending on the employer’s compliance record, and the employer must pay it and file the Form IR21 to avoid prosecution. On conviction in court, the fine may not exceed S$5,000 for each offence, and the outstanding documents still have to be filed.

Where you genuinely cannot give one month’s notice, say so in the Form IR21 and give the reason. IRAS recognises valid reasons and gives an employee’s immediate resignation as an example. IRAS will also consider an appeal to waive a composition amount where it is your first request, where clearance turns out not to have been required, for example where the employee’s physical presence in Singapore was less than 60 days, or where clearance was filed under another company in the same group for the same employment period.

How this fits with cancelling the work pass

MOM’s cancellation rules sit alongside all of this. An Employment Pass must be cancelled within one week after the last day of the notice period, and cancellation can be submitted up to 14 days in advance. If the holder has already left Singapore permanently, cancellation is within one week from the departure date. MOM lists seeking tax clearance from IRAS at least one month before the last day of employment among the things an employer must do before cancelling, alongside giving reasonable notice of repatriation, settling outstanding employment matters, and providing a return air ticket with check-in luggage and connecting transport unless the holder agrees in writing to bear that cost.

Work Permit cancellation follows the same one-week rule, with a one-way ticket dated within 14 days of cancellation, levy charged until the day before cancellation, and a Special Pass rather than a Short-Term Visit Pass. A Work Permit holder’s Primary Care Plan is not cancelled with the pass and must be terminated separately with the Anchor Operator.

The Short-Term Visit Pass

For an Employment Pass holder still in Singapore, you can request a Short-Term Visit Pass at the point of cancellation, giving a lawful stay of up to 90 days from the date of application. Both employer and pass holder receive it by email, and the holder shows it with a valid passport on departure. Two things it does not do: it does not permit work, because once the pass is cancelled the holder cannot work even while waiting to leave, and it does not suspend tax clearance. Note also that cancelling the principal’s pass automatically cancels every family pass issued on the back of it, including a Dependant’s Pass, and those cannot be reinstated.

The sequence to follow when a pass holder resigns

The awkwardness is structural. IRAS wants a month of warning before the last day, MOM wants the pass cancelled within a week after it, so the tax work starts at the top of the notice period and the immigration work finishes at the bottom.

Table 3. A workable order of events

When	What to do	Whose rule
On receiving the resignation	Start withholding all monies due to the employee	IRAS
Same week	Check whether tax clearance is required using IRAS’s categories	IRAS
At least 1 month before the last day	File Form IR21, ideally electronically	IRAS
During the notice period	Give reasonable notice of repatriation, agree the travel arrangements and buy the ticket	MOM
Up to 14 days before the last day	Submit the pass cancellation in advance if you wish	MOM
Within 1 week after the last day of notice	Cancel the work pass, and request a Short-Term Visit Pass or Special Pass if the holder is still here	MOM
On receiving the clearance directive	Remit tax within 10 days, or release the withheld monies	IRAS
Before the holder leaves	Settle all outstanding salary and employment matters	MOM

A short notice period compresses all of this. Where an employee resigns with immediate effect, file the Form IR21 as soon as you can and state the reason for the short notice in the form.

Frequently asked questions

When must an employer seek tax clearance?

At least one month before a non-citizen employee ceases employment in Singapore, starts an overseas posting, or leaves Singapore for more than three months.

Do I need tax clearance for a Work Permit holder?

Possibly not. MOM’s Work Permit cancellation page directs employers to seek tax clearance at least one month before the last day of employment, but IRAS’s exemption scenarios often apply to lower-paid workers, for example where the employee earned less than S$21,000 annually. If you are unsure, e-file the Form IR21 and let myTax Portal tell you.

What does it mean to withhold monies?

You hold back all sums due to the employee, including overtime pay, leave pay, allowances, reimbursements, gratuities and lump sum payments, from the date you learn they are leaving until IRAS issues a clearance directive.

What happens if I file Form IR21 late?

Late or non-filing is an offence. IRAS may offer to compound it for an amount not exceeding S$5,000 per offence, or summon the employer to court, where the fine on conviction may not exceed S$5,000 per offence.

How long does tax clearance take?

IRAS typically processes an e-filed Form IR21 within seven working days and a paper form within 21 days. The directive appears at myTax Portal within three working days of processing and arrives by post within five to seven working days.

Do I still file Form IR8A if I have filed Form IR21?

No. Where the Form IR21 has been filed, you do not also submit that employee’s income through Form IR8A or the Auto-Inclusion Scheme.

Is salary in lieu of notice taxable?

Yes, and it should be declared in the Form IR21. A gratuity for past services at the end of a contract is also taxable. Severance that is genuinely compensation for loss of office may not be, and each component of a retrenchment package should be assessed separately.

When must the work pass be cancelled?

Within one week after the last day of the notice period, or within one week of departure where the holder has already left Singapore permanently. Cancellation can be submitted up to 14 days in advance.

Can the employee stay in Singapore after the pass is cancelled?

An Employment Pass holder can be given a Short-Term Visit Pass granting up to 90 days of lawful stay from the date of application, and a Work Permit holder a Special Pass. Neither permits work. All passes issued to family members are cancelled with the principal’s pass and cannot be reinstated.

How we can help

Little Big Employment Agency Pte Ltd is an employment agency licensed by the Ministry of Manpower, EA Licence 19C9790. We handle the work pass side of a departure: cancellation within MOM’s deadline, the Short-Term Visit Pass or Special Pass, the family passes, and the repatriation obligations that sit alongside them.

We are not tax agents. Form IR21, the withholding calculation and the clearance directive are tax matters and IRAS is the authority. Our affiliate Raffles Corporate Services handles payroll, IR8A and IR21 filing under a separate engagement, and that is where we refer the tax work. Where a matter needs legal advice we refer it to an independent Singapore law firm.

What we add is the sequencing. Most of the trouble in a departure comes from doing the right things in the wrong order, and a resignation with three weeks of notice leaves no room for error on either deadline.

Talk to our team about cancelling a work pass properly.

Official sources

• IRAS: Tax Clearance for Foreign and SPR Employees (IR21)
• IRAS: Tax Clearance for Employees, including when it is not required
• IRAS: Getting Tax Clearance, a step-by-step guide
• IRAS: Late filing or non-filing of tax clearance
• MOM: Cancel an Employment Pass
• MOM: Cancel a Work Permit

Checked against IRAS and MOM guidance on 15 September 2026. IRAS is the authority on tax clearance and MOM on the work pass. This page is general information, and it is neither tax advice nor legal advice. See our legal and referral information.