Companies Reported for Employing "Phantom Workers"

78 Ms Nadia Ahmad Samdin asked the Minister for Manpower (a) from 2021 to date, how many companies have been reported for employing “phantom workers”; (b) what are the top three sectors in which such companies function; and (c) what recourse is available for unsuspecting workers when their salaries and CPF contributions trigger incorrect income tax requirements.

Dr Tan See Leng: From 2021 to 30 June 2023, the Ministry of Manpower (MOM) received about 2,000 reports on companies inflating their foreign worker quota by making Central Provident Fund (CPF) contributions to locals who are not working for the firm, otherwise known as “phantom workers”. Of these, only about 10% were eventually found to be substantiated and referred for further investigations. The top three sectors were food and beverage, personal services, such as beauty salons and spas, and manufacturing.

As “phantom workers” are typically only paid CPF and not their salary, these CPF contributions would not form part of the taxable income. However, should anyone suspect that their income tax had been incorrectly computed, they should inform the Inland Revenue Authority of Singapore (IRAS) promptly and provide supporting documents to validate their claims, for example, payslip or employment agreements. IRAS will then review and rectify any inaccuracies if substantiated.

Singaporeans who receive CPF contributions from unknown companies should immediately report the matter to the CPF Board.