Unfortunately, there is content on the internet about CPF that may be misleading. So much so that it is hard for US exposed taxpayers to know what to trust. As one of the few tax firms with “boots on the ground” in Singapore, we feel confident in our ability to deal with those exposed to the tax rules of both Singapore and the US.
CPF contributions are payable when there is an employer-employee relationship, i.e. a contract of service. Employers are required to pay both the employer and employee’s share of CPF contributions every month. They are entitled to recover the employee’s share from the employee’s wages. CPF contributions are payable for Singapore citizens (SCs) and Singapore permanent residents (SPRs) who are:
However, if the employee is an SC or SPR working overseas, CPF contributions are not mandatory. The CPF was established to help working Singaporean citizens and permanent residents save for retirement and provides assistance for healthcare, home ownership, family protection, and asset enhancement. Expats can start making monthly contributions to their CPF when they become Singapore Permanent Residents (SPR). For the first two years, CPF contributions by both employees and employers can be done at reduced rates to help employees adjust to the lower take-home pay. Eligible members can withdraw their CPF savings if they leave Singapore permanently and have no intention of returning for re-employment or residence, or are permanently incapacitated.CPF monthly contributions go into several accounts designed for various purposes including housing, medical and retirement needs. These include the Ordinary Account (OA) designed for housing, insurance, investment and education, and the Special Account (SA) for old age and investments in retirement-related financial products. The MediSave Account (MA) is geared towards health insurance and hospitalization expenses while the Retirement Account (RA) is created automatically on one’s 55th birthday. For more information about the CPF, visit http://www.cpf.gov.sg
Our position is that Singapore’s CPF is taxable by the US for US exposed persons. Please see the screenshots below in support of our position.