As Contractor
Software, equipment, transport, co-working space, insurance, etc.
As Employee
What you would earn in a comparable full-time role.
Contractor Take-Home
$98,792.65
$8,232.72/month
Employee Take-Home
$65,192.40
$5,432.70/month
Difference
+$33,600.25
+$2,800.02/month
Adjusted for missed employer CPF ($13,872.00): contractor effectively earns $19,728.25 more per year.
| Item | Contractor | Employee |
|---|---|---|
| Gross Income | $120,000.00 | $84,000.00 |
| Business Expenses | $10,000.00 | N/A |
| CPF Employee | N/A | $16,320.00 |
| MediSave | $5,110.00 | Included in CPF |
| Income Tax | $6,097.35 | $2,487.60 |
| Take-Home Pay | $98,792.65 | $65,192.40 |
| Employer CPF (hidden benefit) | $0 | $13,872.00 |
| Total CPF Savings | $5,110.00 | $30,192.00 |
| Effective Tax+Deduction Rate | 10.2% | 22.4% |
Employees benefit from employer CPF contributions (17%, capped at OW ceiling), Employment Act protection (leave, notice, overtime), employer-paid SDL training, and automatic IR8A tax filing.
Contractors (self-employed) can deduct business expenses, have more flexibility, and may earn higher gross income. However, they must pay their own MediSave, do not receive employer CPF, must file their own taxes, and must arrange their own insurance and leave.
Key considerations: When comparing, account for the employer CPF that contractors miss out on (this is retirement savings worth 17% of salary). Also factor in paid leave (typically 14-21 days/year for employees), medical benefits, and insurance that contractors must self-fund.
GST: Contractors with annual turnover exceeding $1 million must register for GST and charge 9%. GST collected must be remitted to IRAS but can be offset against GST paid on business purchases (input tax).
What is the difference between a contractor and an employee in Singapore?
An employee has CPF contributions (both employee and employer), is covered by the Employment Act, and has the employer handle IR8A filing. A contractor/freelancer is self-employed, must file their own taxes, pay MediSave contributions, and does not receive employer CPF.
Do contractors need to register for GST?
You must register for GST if your taxable turnover exceeds $1 million in a 12-month period, or you expect it to exceed $1 million. You can also voluntarily register. Once registered, you charge 9% GST on your services.
Do self-employed contractors pay CPF?
Self-employed persons are required to contribute to MediSave but not to the Ordinary Account (OA) or Special Account (SA). Voluntary CPF contributions to OA/SA are allowed and qualify for tax relief.
How should contractors price their services?
To match employee-equivalent take-home pay, contractors should charge enough to cover: income tax, MediSave, business expenses, lack of employer CPF (17%), leave, insurance, and no SDL training levy benefits. Typically, daily rates are 30-50% higher than the employee-equivalent.
How independent contractors handle income tax, CPF, and GST obligations
How is a contractor taxed differently from an employee in Singapore?
An employee has CPF contributions and income tax handled by their employer. A contractor must manage everything themselves. You file your own tax return with IRAS, pay your own MediSave contributions, and are not covered by the Employment Act. Your income is taxed at the same progressive rates, but you can deduct business expenses that employees cannot.
Do contractors need to pay CPF in Singapore?
Self-employed contractors do not pay regular CPF contributions like employees. However, you must contribute to MediSave if your net trade income exceeds S$6,000 per year. The MediSave rate depends on your age and income. For example, if you are under 35 and earn S$18,000 or more, you pay 10.5% of your net trade income into MediSave.
What business expenses can a contractor deduct?
You can deduct expenses that are wholly and exclusively for earning your income. Common deductions include office rent, equipment, software subscriptions, travel to client sites, professional development courses, and insurance. If you work from home, you can claim a portion of your utilities and internet. Keep receipts — IRAS may ask for proof.
When does a contractor need to register for GST?
You must register for GST if your taxable turnover exceeds S$1 million in the past 12 months, or you expect it to exceed S$1 million in the next 12 months. Once registered, you charge 9% GST on your services and file quarterly returns. Below the threshold, GST registration is voluntary but can be useful if your clients are GST-registered businesses.
How do you file taxes as a contractor?
You file Form B (for self-employed individuals) with IRAS by 15 April each year (paper) or 18 April (e-filing). You report your gross income, deduct allowable expenses, and declare your net trade income. IRAS then calculates your tax using progressive rates. You can pay via GIRO in monthly instalments to spread the cost.
What is the difference between a contractor and a freelancer in Singapore?
In Singapore, the tax treatment is the same. Both are self-employed and taxed on net trade income. The main difference is how the work is structured — contractors often work on longer-term projects with fewer clients, while freelancers may take on many short-term jobs. For IRAS purposes, both file Form B and pay MediSave.
How much should a contractor set aside for taxes?
A good rule of thumb is to set aside 15% to 25% of your net income for taxes, depending on how much you earn. If your net trade income is S$80,000, your tax bill will be around S$3,350 (after reliefs). Add about S$4,800 for MediSave contributions. Keeping a separate savings account for tax is a smart move.
IRAS-Aligned: Based on 2025 IRAS rates and thresholds. For personal advice, speak to a qualified tax professional.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms