Singapore Withholding Tax

Withholding Tax In Singapore

Definition of Withholding Tax

A withholding tax is an income tax to be paid to the Government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient.

Overview of Withholding Tax in Singapore

Under the law, a person (known as the payer) who makes payment(s) of a specified nature (e.g. Royalty, Interest, Technical Service Fee, etc.) to a non-resident company or individual person (known as payee) is required to withhold a percentage of that payment and pay the amount withheld (called ‘Withholding Tax’) to the tax authority viz. IRAS.

From 1 Jul 2016, the withholding tax form can only be filed electronically via myTax Portal. The payer must e-file and pay the withholding tax to IRAS by the 15th of the second month from the date of payment to the non-resident.

To find out the percentage to withhold, you can refer to below Types of Payment and the Applicable Withholding Tax Rates.

Withholding Tax Rates

Nature of IncomeTax Rate
Interest, commission, fee or other payment in connection with any loan or indebtedness15% 1
Royalty or other lump sum payments for the use of moveable properties10% 1 2
Payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information10% 1 2
Rent or other payments for the use of moveable properties15% 1
 Technical assistance and service feesPrevailing Corporate

Tax rate 3 5

Management fees Prevailing Corporate

Tax rate  3 5

Payment to Non-Resident Professional/Foreign Firms (Unincorporated)15% on gross income or prevailing non-resident individual rate on net income
Payment to Non-Resident Public Entertainer10% on gross income (till 31 Mar 2020)
Payment to Non-Resident Director22% (20% prior to Year 2016)
Commission/Payment to Non-Resident International Market Agent3%
Time, voyage and bare boat charter fees for charter of air craftsApplicable aircraft charter rates
Time, voyage and bare boat charter fees for the charter of shipsNil
Proceeds from sale of any real property by a non-resident property trader15%
Distribution of taxable income made by REIT to unit holder who is a non-resident (other than an individual)10% 4

Notes:

1These withholding tax rates apply when the income is derived by the non-resident person through operations carried on outside Singapore. They are to be applied on the gross payment. The resulting tax payable is a final tax. The following tax rates apply on gross payments when operations are carried out in Singapore:

  • Non-resident person (other than individuals): Prevailing corporate tax rate
  • Non-resident individuals: 22% (20% for period of engagement prior to 1 Jan 2016)

2The reduced withholding tax rate of 10% applies to payments due and payable on or after 1 Jan 2005.

3Withholding tax is based on the prevailing corporate tax rate for the year when the services were provided (period of payment), even if payment to the non-resident is made in a different year. For example, if the service was provided in Dec 2008 but payment was made in 2009, the prevailing corporate  tax is that for 2008 (Year of Assessment 2009), which is 18%.
For payments made to non-resident individuals, tax is to be withheld at 20% (from 1 Jan 2016, the rate will be increased to 22%) on the gross payment.

4 The reduced withholding tax rate of 10% applies to distributions made during the period from 18 Feb 2005 to 31 Mar 2020 (Budget 2005 and Budget 2015 refer). From 16 Feb 2007, withholding tax does not apply to any distribution made by the trustee of the REIT where tax has already been paid, on the income from which the distribution is made, by the trustee of the trust (Income Tax (Amendment) Act 2007 refers).

If tax has been deducted in error at the prevailing corporate tax rate from the distributions made to nominees whose beneficiaries are any of the persons listed below, the Comptroller will refund the tax over-deducted to the trustee of REIT directly on a quarterly basis. The beneficiaries^ may be any of the following:

  • qualifying individual;
  • qualifying non-resident non-individual;
  • charity registered under the Charities Act (Cap. 37) or established by any written law;
  • town council;
  • statutory board;
  • co-operative society registered under the Co-operative Societies Act (Cap. 62); or
  • trade union registered under the Trade Unions Act (Cap. 333).

^ Do not include a person acting in the capacity of a trustee. 

The trustee,in turn will refund the amount to the nominees who will then refund it to the beneficiaries. For this purpose, the trustee is required to send its request for refund with all the original subsidiary income tax certificates on a consolidated basis. Please send your request to:

Revenue & Payment Management Branch
Inland Revenue Authority of Singapore
55 Newton Road
Revenue House
Singapore 307987

Tax refund under S46 of ITA for payments withheld at prevailing corporate tax rate

 

When you encounter with any of the following issues with your Book-Keeping &/or Accounting staff then we strongly suggest you to consider for outsourcing to ACHI BIZ as our costs are fixed basis per annum:
  • To maintain the integrity of your financial positions & reports
  • Tired of too many absenteeism
  • Availing even unpaid leave for frequently for holidaying
  • Demanding regular increment
  • If there is no increment then working with unhappiness & with no target
  • Demanding Thirteenth month salary & bonus even while your business is on negative
  • Hard to retain for long run
  • Negative feedback about your management to the new employees or online

 

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