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Singapore – NOR Exemption Change for Employers’ Contributions to Overseas Pension Fund

Singapore – NOR Exemption Change for Employers’

This GMS Flash Alert reports on the Singapore tax authority’s change to the tax rules concerning the treatment of the employer’s contribution to a non-mandatory overseas pension or provident fund.



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The Inland Revenue Authority of Singapore (IRAS) has changed the tax rules concerning the Not Ordinarily Resident (NOR) tax concession of exemption from tax for the employer’s contribution to a non-mandatory overseas pension or provident fund1.

The change applies retroactively from 1 January 2014.


Certain employees are precluded from the tax exemption of employer’s contributions to overseas pension or provident fund under the NOR taxpayer scheme due to the change.  For tax-equalised employees, the higher tax burden will be borne by the employer. 


Under the law, where in any year contributions have been made by an employer in respect of an employee to any pension or provident fund constituted outside Singapore, employer contributions made to the fund shall be deemed to be income to the employee for the year in which the contributions are paid. 

However, under the NOR taxpayer scheme, an eligible NOR employee may apply for the concession of an exemption from tax for the employer’s contribution to a non-mandatory overseas pension or provident fund.  An overseas pension or provident fund will generally be regarded as a non-mandatory fund where the contributions are not made to compulsory schemes operated, regulated, and supervised by the employee’s home country government while the employee is working outside his or her home country. 

The contribution exempt from tax is capped2, and the following requirements must be satisfied for the NOR concession:

  • The employee is an NOR individual; 
  • He/she is neither a citizen nor a permanent resident of Singapore at the time such contribution is made; 
  • His/Her employment income is at least S$160,000 for the year; and 
  • The employer must not claim a corporate tax deduction (up to the NOR cap) for the contribution. 

In addition, employees of an investment holding company, a tax-exempt body, a representative office or a foreign company not registered in Singapore, will not be able to enjoy the NOR concession on or after 1 January 2014.  Employees of a service company that adopts the "cost plus mark-up" basis of tax assessment will also not be able to enjoy the NOR concession after Year of Assessment (YA) 2015 (i.e., for the company’s accounting period ending in 2014).

Tax Treatment Changes

The IRAS has now changed the tax treatment to further exclude employees from the NOR concession where the employer’s contribution is not charged or recharged to any Singapore entity.  The change applies retroactively from 1 January 2014.

According to the IRAS, the rationale for allowing an employee to claim a tax concession under the NOR taxpayer scheme is that the employer is effectively bearing the tax on behalf of the employees by foregoing a corporate tax deduction for the contribution to the overseas pension/provident fund. Therefore, where the expense for the employer’s contribution is not borne by the Singapore entity, the employee would not be eligible for the NOR tax concession because there is no actual shift in incidence of taxation from the employee to the employer, notwithstanding no deduction is claimed by the Singapore entity.


Employers in Singapore may wish to consider accepting contribution costs from their overseas parent and/or related companies in order for their NOR employees to qualify for the concession. 

The KPMG International member firm in Singapore has approached the IRAS to re-consider the retroactive application of the change to 2014.  The IRAS has advised for the prior YA 2015 and 2016 (i.e., calendar tax years 2014 and 2015 respectively) where the NOR concession has been previously granted, it is prepared to waive the requirement for the employers to file amended tax forms; and thus, no adjustments to the prior years’ assessments of the employee are required.


1  For further information see this IRAS webpage.  

2  The NOR cap is computed based on Central Provident Fund (CPF) capping rules as if the employer had made contributions to the CPF Board for a Singapore citizen as required under the CPF Act.  For example, for the year 2016, the maximum employer’s CPF contribution limit is S$17,340 for employees age 55 years and below.  The NOR cap is also determined based on the total employer contribution to an approved mandatory or a non-mandatory overseas contribution scheme or to both.


S$1 = US$0.72  

S$1 = €0.643      

S$1 = £0.555      

S$1 = A$0.962  


This article is excerpted, with permission, from “Change in Tax Treatment – NOR Exemption of Employer’s Contribution to Overseas Pension or Provident Fund,” in Tax Alert (Issue 26, May 2017), a publication of the KPMG International member firm in Singapore.

The information contained in this newsletter was submitted by the KPMG International member firm in Singapore.

© 2018 KPMG Services Pte Ltd (Registration No. 200003956G), a Singapore incorporated company and a member firm of the KPMG network of independent member firms affiliated with KPMG International cooperative, KPMG International. All rights reserved.

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