SINGAPORE - The gap between estimated and actual payments collected under the Skills Development Levy (SDL) has fallen from 18 per cent in 2008 to between 3 per cent and 4 per cent today, said Minister of State for Education Gan Siow Huang.
This is due to SkillsFuture Singapore (SSG) improving its IT system and through reminder letters and calls, Ms Gan said in reply to MPs' questions about lapses flagged by the Auditor-General's Office (AGO) in its annual report last month.
She told Parliament on Monday (Aug 1): "Nevertheless, SSG acknowledges that more needs to be done to actively reconcile the remaining gap and help all employers pay the correct amount of SDL."
In its report released on July 20, the AGO had found SSG lax in enforcing the collection of SDL funds from 2015 to 2020. This resulted in an estimated $43 million owed to the agency as at April this year.
The SDL is a levy which companies pay every month for foreign and local employees in Singapore, which is about 0.25 per cent of their monthly wages.
The report also found that SSG, which is the government agency in charge of lifelong learning, had overpaid an estimated $4.22 million due to lapses in the management of its grants.
Responding to questions from MPs Yip Hon Weng (Yio Chu Kang) and Sylvia Lim (Aljunied GRC) on the AGO's findings, Ms Gan said SSG uses existing government data, such as data from the Central Provident Fund, to estimate how much in levies companies should pay.
This means that SSG's estimates may differ from the actual amount paid by employers, due to factors like fluctuations in workers' actual wages every month.
SSG is working with GovTech to roll out an IT system by the middle of next year that can more accurately estimate and track such payments while also helping employers better estimate their SDL liabilities, she added.
Ms Gan, who is also Minister of State for Manpower, said SSG has started engaging affected employers and will contact all of them by the end of the financial year, and that they will be given time to validate the amount owed.
SSG will send payment reminders and develop more efficient processes to resolve differences in companies' and SSG's estimates, she added.
"For the few recalcitrant employers who do not pay the outstanding levies despite reminders, SSG will take decisive punitive action," she said.
Addressing the overpayment of grants by SSG, Ms Gan said the agency was still investigating and had not yet determined if they were due to fraud.
"We have not used that term yet because, as I explained, there is a lengthy verification process with the individuals and the companies and training providers involved," she said in reply to a follow-up question by Ms Lim.
The bulk of these claims occurred before November 2020, when SSG's IT system was using a declaration-based approach, noted Ms Gan.
Errors had also occurred during manual processing of grants, including human errors made by a service provider contracted by SSG, she added, without naming the provider.
Ms Gan said SSG is now looking at the service provider's contractual liability.
"The root cause we have identified is the massive volume of manual processing that makes it very difficult for all the verifications to be done fully and hence, there needs to be more upstream changes in the policies and business rules," she said.