Co-funding of wage increases under the Wage Credit Scheme (WCS)

1 March 2013

The Wage Credit Scheme (WCS) is part of a 3-Year Transition Support Package, introduced in Budget 2013, where the Government will co-fund 40% of wage increases given to Singaporean employees earning a gross monthly wage of up to $4,000. It covers wage increases of at least $50 given between 2013 and 2015.

Under the scheme, if an employer increases the gross monthly wage of his employee by, say, $200 in 2013, the Government will co-fund 40% of the increase (ie $80 per month) and for the subsequent two years if the increase is sustained. If further increases are given in 2014 and 2015, the Government will co-fund 40% of the further wage increases. Once an employee’s gross monthly wage exceeds $4,000, the portion of the wage increase that brings the gross monthly wage above $4,000 will not be eligible for co-funding under the WCS.

All employers will automatically be covered under the WCS except for government related entities and entities not registered in Singapore.

The payouts to eligible employers will be made automatically on an annual basis, the first payout being in the second quarter of 2014 and the last payout being in 2016. As the wage credit is a co-funding of wage increase, it is a taxable revenue grant in the hands of the employer. In this regard, the credit may be used to offset outstanding tax arrears of the employer before the remaining amount, if any, is paid out.

To qualify for co-funding in 2013, employees must be:

• Singapore citizens
• earning a gross monthly wage of less than $4,000
• employed for at least three months in 2012, and
• on the employer’s payroll for at least 3 months in 2013 (ie employer must have paid employee CPF contributions for at least three months in 2013).

Owners of companies or businesses are not considered employees even if they have paid themselves CPF contribution.

More information of the WCS can be found on the IRAS website.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit for more information.