Per Diem Allowance for Singapore: A Basic Guide

If you have ever had to travel for work, you know that managing expenses can be tricky. Companies often provide employees with a per diem allowance to help cover the cost of meals, accommodation, and other daily expenses while on business trips. But what exactly is a per diem allowance in Singapore, and how does it work? 

In this guide, we will break it down, giving you a clear understanding of what you need to know, especially when it comes to the regulations set by the Inland Revenue Authority of Singapore (IRAS).

Whether you are a customer managing business travel or an employee traveling for work, understanding per diem expense guidelines will help you make the most of your per diem allowance.

What is a Per Diem Allowance?

A per diem allowance is a fixed daily amount that an employer provides to employees for business travel. The term “per diem” comes from Latin, meaning “per day.” It covers basic travel expenses such as food, accommodation, and incidental costs—without requiring employees to submit individual receipts for every purchase. 

A typical per diem allowance covers three main categories of expenses:

• Meals: Breakfast, lunch, and dinner while traveling.
• Accommodation: Hotel or other lodging costs during the trip.
• Incidentals: Small, everyday expenses such as fuel, local transportation (taxi fares), and other minor costs.

For example, if an employee is traveling for three days, they might receive a per diem allowance that covers meals, lodging, and small expenses for each day. This makes it easier to track expenses and allows employees to manage their budget while on the road.

But do they cover everything? No. Per diem rates do not cover every type of business expense. Some costs are not part of the allowance. Although these rules may differ for companies, here are a few examples:

• Hotel stays during international trips
• Rides to and from airports overseas
• Tickets for flights, trains, or other travel to your destination
• Entertainment expenses like client dinners, team-building events, or similar activities

These costs should be handled through a separate travel reimbursement process.

In Singapore, companies offer per diem allowances for domestic and international business trips. The allowance can vary depending on the destination, the duration of the trip, and the company’s policies. However, companies need to ensure that their per diem allowance rates comply with IRAS guidelines to avoid any potential tax issues.

The Benefits of Per Diem Management

Managing per diem allowances correctly offers clear benefits for both employers and employees. It can make processes smoother, reduce paperwork, and help control costs. Let us look at the main advantages of good per diem management:

1. Simple Expense Tracking

With per diem allowances, employees do not need to save and submit receipts for each expense. Instead, they get a fixed daily amount. This makes it easier for them and cuts down on paperwork for the employer.

2. Easier Budgeting

A set daily rate helps businesses plan out-of-pocket expenses more accurately. Employers know how much to expect each day. This helps avoid surprises and keeps budgets on track.

3. Less Risk of Over-Spending

Because the per diem allowance is fixed, employees are more likely to stay within limits. They do not need to worry about spending too much, unlike reimbursement methods, where every expense needs to be accounted for.

4. Employee Satisfaction

Employees do not need to spend time collecting receipts or waiting for reimbursement. This saves time and reduces frustration. With less paperwork, employees can focus on their work, leading to better satisfaction.

How is the Per Diem Allowance Calculated in Singapore?

The calculation of per diem allowance in Singapore depends on several factors, including the destination, the company’s policy, and IRAS guidelines. Here is a breakdown of how it is typically calculated:

• Destination-Based Rates: The per diem allowance usually varies depending on the country or city. For more expensive destinations, such as the United States or Europe, the allowance tends to be higher compared to less costly locations.
• Company Policy: Employers are free to set their own per diem rates, but these should stay within reasonable limits to comply with IRAS guidelines. Companies need to ensure the rates are sufficient to cover necessary expenses without being excessive.
• IRAS Guidelines: The IRAS sets specific “acceptable rates” for per diem allowances in different countries. If an employer pays an allowance that exceeds the acceptable rate, the extra amount may be treated as taxable income.

Here is an example to show how IRAS guidelines apply in practice:

• Allowance Below the Acceptable Rate:

The acceptable per diem rate for Germany in 2024 is SGD 125 per day.

Suppose a company called TechSolutions Ltd paid Mr. Lee SGD 100 per day for his business trip to Germany. Since the per diem of SGD 100 is less than the acceptable rate of SGD 125, there is no taxable benefit. Therefore, TechSolutions Ltd does not need to declare this amount in Form IR8A.

• Allowance Above the Acceptable Rate:

The acceptable per diem rate for Germany in 2024 is SGD 125 per day.

Suppose a company called GlobalTech Ltd. paid Ms. Tan a per diem allowance of SGD 150 per day for her business meetings in Germany. For the six days she was there, Ms. Tan received SGD 900.

• Excess Amount per Day = SGD 150 – SGD 125 = SGD 25
• Taxable Amount = SGD 25 x 6 days = SGD 150

Since the excess amount of SGD 25 per day is above the acceptable rate, SGD 150 will be considered taxable income and should be reported in Form IR8A.

List of IRAS Per Diem Rates for 2024

Check out the latest country-specific acceptable per diem allowances for 2024.

Country/ Region	Rate Per Day (S$)	Country/ Region	Rate Per Day (S$)
Afghanistan	101	Canada	144
Albania	87	Cape Verde	77
Algeria	123	Cayman Islands	144
Angola	143	Central African Rep	97
Anguilla	181	Chad	87
Antigua	162	Chile	129
Argentina	98	China	90
Armenia	98	Colombia	44
Aruba	135	Comoros	94
Australia	126	Congo, Republic	155
Austria	116	Congo, Democratic Rep	151
Azerbaijan	85	Cook Islands	122
Bahamas	158	Costa Rica	116
Bahrain	156	Cote d’Ivoire	128
Bangladesh	112	Croatia	131
Barbados	189	Cuba	98
Belarus	95	Cyprus	77
Belgium	137	Czech Republic	82
Belize	90	Denmark	134
Benin	109	Djibouti	144
Bermuda	183	Dominica	144
Bhutan	123	Dominican Republic	93
Bolivia	66	Ecuador	90
Bosnia & Herzegovina	68	Egypt	106
Botswana	72	El Salvador	87
Brazil	40	Equatorial Guinea	175
British Virgin Islands	129	Eritrea	60
Brunei	70	Estonia	90
Bulgaria	93	Eswatini (Lilangeni)	61
Burkina Faso	132	Ethiopia	153
Burundi	93	Fiji	132
Cambodia	136	Finland	113
Cameroon	113	France	143
Gabon	162	Lesotho	56
Gambia	92	Liberia	96
Georgia	100	Libya	114
Germany	118	Lithuania	83
Ghana	157	Luxembourg	162
Greece	103	Macao	67
Grenada	108	Madagascar	103
Guam	101	Malawi	76
Guatemala	98	Malaysia	73
Guinea	112	Maldives	155
Guinea-Bissau	78	Mali	112
Guyana	144	Malta	105
Haiti	120	Marshall Islands	84
Honduras	67	Mauritania	71
Hong Kong	96	Mauritius	90
Hungary	102	Mexico	137
Iceland	112	Micronesia	84
India	100	Moldova, Rep of	76
Indonesia	130	Monaco	130
Iran	39	Mongolia	79
Iraq	119	Montenegro	67
Ireland	119	Montserrat	80
Israel	155	Morocco	113
Italy	111	Mozambique	105
Jamaica	112	Myanmar	101
Japan	162	Namibia	70
Jordan	91	Nauru	73
Kazakhstan	96	Nepal	101
Kenya	128	Netherlands	111
Kiribati	43	New Zealand	121
Korea, North	92	Nicaragua	68
Korea, South	122	Niger	93
Kuwait	198	Nigeria	96
Kyrgyzstan	94	Niue	107
Lao People’s Democratic	80	Norway	133
Latvia	87	Oman	105
Lebanon	141
Pakistan	122	Sweden	137
Palau	112	Switzerland	146
Panama	86	Syrian Arab Rep	146
Papua New Guinea	121	Taiwan	64
Paraguay	75	Tajikistan	65
Peru	108	Tanzania	109
Philippines	96	Thailand	87
Poland	88	The Republic of North Macedonia	70
Portugal	116	Timor-Leste	76
Qatar	128	Togo	115
Romania	92	Tokelau Islands	42
Russian Federation	130	Tonga	84
Rwanda	103	Trinidad &Tobago	130
Samoa	116	Tunisia	79
Sao Tome & Principe	119	Türkiye	64
Saudi Arabia	141	Turkmenistan	108
Senegal	121	Turks & Caicos Island	145
Serbia	76	Tuvalu	73
Seychelles	114	Uganda	162
Sierra Leone	104	Ukraine	114
Singapore	150	United Arab Emirates	140
Slovakia	88	United Kingdom	156
Slovenia	106	United States	150
Solomon Islands	148	Uruguay	73
Somalia	78	Uzbekistan	83
South Africa	56	Vanuatu	126
Spain	116	Venezuela	63
Sri Lanka	80	Vietnam	65
St Kitts & Nevis	152	Virgin Island (US)	173
St Lucia	159	West Bank & Gaza Strip	66
St Vincent	103	Yemen, Rep of	103
Sudan	90	Zambia	123
Suriname	74	Zimbabwe	89

Common Mistakes to Avoid with Per Diem Allowance

Businesses can make several mistakes when managing per diem allowances. These errors can lead to confusion, extra costs, or even legal problems. By avoiding them, employers can keep things running smoothly for everyone. Here are some common mistakes to avoid:

1. Exceeding Allowance Limits

A common mistake is setting per diem rates higher than necessary. This can lead to overspending and, if the amounts exceed what IRAS considers reasonable, cause tax issues. Staying within the guidelines is important to avoid extra costs.

2. Not Keeping Good Records

Failing to keep track of who gets the allowance, when they travel, and how much they receive can create problems later. Poor record-keeping makes it hard to verify expenses or comply with audits.

3. Not Understanding Tax Rules

Some employers may not know when a per diem allowance becomes taxable. If an employee gets too much money or uses the allowance for personal reasons, it might be taxed. Understanding IRAS rules can help avoid this.

4. Not Updating Rates Regularly

Travel costs can change over time. If employers do not update per diem rates based on inflation or rising costs, they might be giving employees too little or too much. It is important to check rates regularly to make sure they match current costs.

Per Diem Allowance vs. Reimbursement: What is the Difference?

It is important to know the difference between a per diem allowance and a reimbursement. Both help cover travel expenses, but they work in different ways.

• A per diem allowance is a fixed daily amount given to employees for travel expenses. It is fixed so employees know exactly how much they can spend each day.
• A reimbursement happens when an employee spends money out of their pocket and asks the company to pay it back. Employees must provide receipts and details for every purchase.

Understanding when to use each one can help businesses and employees manage costs better.

Each method has its place. Per diem allowances are simpler, while reimbursement offers more flexibility for unique expenses.

Automating Travel and Expense Management with Peakflo

Managing per diem allowances and travel expenses can be challenging for businesses. However, automating the process with Peakflo makes everything simpler. By streamlining tasks such as travel requests, expense reports, and reimbursements, businesses can save time, reduce errors, and stay within budget.

1. Simple Employee Setup

Peakflo makes it easy to add employees and manage their travel expenses. You can quickly upload employee information in bulk using a CSV or integrate with existing ERP. Such expense report automation features help businesses save time and ensure that everyone is set up properly. Once employees are added, you can assign them the right permissions so they only have access to what they need.

2. Clear Permissions and Access

With Peakflo’s automated travel expense management, you can control who can submit expenses, approve requests, and view reports. It’s easy to assign the correct permissions to each employee or manager. This ensures that only authorized people are handling or approving per diem expenses. The platform lets you check all permissions in one glance, so you always know who is in charge of what.

3. Customize Expense Policies

Every business has different rules for what employees can spend on travel. With Peakflo, you can set up custom policies to match your company’s needs. You can define limits for meals, accommodation, and incidentals, ensuring that employees follow the rules for per diem expenses. This helps businesses avoid overspending and ensures that per diem allowances are managed correctly.

4. Control Currency Conversion Fees

When employees travel internationally, currency exchange fees can add up quickly. With Peakflo, you can set limits on these fees to make sure they do not exceed your company’s policy. If the exchange rate surcharge goes over the limit, the traveler is immediately notified, ensuring full transparency.

5. Boost Efficiency with Automated Approvals

One of the best features of Peakflo is the ability to automate approvals. Managers can quickly review and approve per diem allowances and travel expenses with just a few clicks. This speeds up the process and makes things easier for everyone.

6. Set Per Diem Rates

Peakflo makes managing per diem expenses easier by giving you flexibility. Depending on your employees ‘ needs, you can set different rates for full or half-day travel expenses. It also lets you adjust per diem limits based on the city or country. Plus, you can assign limits to specific expenses, giving you better control and clear visibility over your travel expense reporting and budget management.

Conclusion

Managing per diem allowance is an important part of business. It helps ensure employees have enough money to cover their travel costs while also keeping company expenses under control. When businesses understand how per diem rates work in Singapore, they can set fair and clear allowances that support employees on their work trips.

Using tools such as Peakflo can make managing these expenses much easier. By automating tasks such as travel requests, expense reports, and reimbursements, companies can save time, reduce mistakes, and better control their finances.

Ready to ditch the spreadsheets? Book a demo tour and discover how automation can make per diem allowances and reimbursements effortless and error-free.