Singapore uses its taxes to build a stronger community, a better environment and a more vibrant economy. In spite of its low tax rates, Singapore has consistently generated budget surpluses, due to its simple and efficient tax structure. Withholding taxes have supported the government in its objective, by enabling it to get a steady stream of income throughout the year, since they are remitted early and makes it less likely that people would avoid their due taxes.
What Is Withholding Tax?
Singapore withholding tax refers to the tax withheld and paid to the Inland Revenue Authority of Singapore (IRAS), when a non- resident company or individual derives an income from a Singaporean source, for services provided or work done in Singapore. IRAS is the authority responsible for administration of taxes in Singapore.
As for this topic, a non-resident company is the one whose ‘control and management’ is not exercised from Singapore, whereas, a non-resident individual includes professionals, public entertainers or directors of a company, who are not tax residents of Singapore.
What Payments Attract Withholding Tax In Singapore?
Following payments would attract withholding tax
- Payments for services, interest, royalty, rental of movable properties, management fee, etc.
- Payments to non-resident directors, professionals, public entertainers and international market agents.
- Foreigners/PRs withdrawing from Supplementary Retirement Scheme (SRS) Account.
- Distributions of Real Estate Investment Trusts (REITs).
What Rates Does Withholding Tax Attract?
Tax Rates For Payment of Services, Interest, Royalty, Rent of Movable Property, Etc., To Non-Residents
|Interest, commission, fee or other payment in connection of any loan or indebtedness (subject to note 1).|
|Rent or other payments, for the use of movable property (subject to note 1).|
|Proceeds from sale of any real property, by a non-resident property trader.|
|Royalty or other lump sum payments for the use of movable property (subject to note 1 and 2).|
|Payment for the use of, or the right to use scientific, technical, industrial or commercial knowledge or information |
(subject to note 1 and 2)
|Distribution of taxable income to unit holder, being non-resident (other than individual) by REIT (subject to note 4).|
|Royalty and other payment made to author, composer or choreographer (subject to note 2).|
Prevailing corporate tax rates
|Technical assistance and service fee (subject to note 3 and 5).|
|Management fee (subject to note 3 and 5).|
Applicable aircraft charter rates
|Time, voyage and bareboat charter fee, for charter of aircraft.|
- Note-1: These rates apply when a non-resident derives income from operations outside Singapore. If operations are within Singapore, for non-resident individuals, rate is 22%, and for others it’s prevailing corporate tax rate. Rates apply on gross payments.
- Note-2 : Rate applies on payments due on or after 1 January 2015.
- Note-3 : Prevailing corporate tax rate relates to rate in the year of provision of service.
- Note-4 : From 1 April 2020, rate of 10% applies for distributions made by REIT to qualifying non-resident non-individual unit holders.
- Note-5 : Tax refunds under S46 of ITA, for payments withheld at corporate tax rates.
Tax Rates For Non-Resident Directors, Professionals, Public Entertainers And International Market Agents
|Payment to non-resident director.|
15% (on gross income) or
|Payment to unincorporated non-resident professional/foreign firms.|
10% (on gross income)
|Payment to non-resident public entertainers (till 31 March 2022).|
|Commission/payment to non-resident international market agent.|
When Should I File And Pay Withholding Tax With IRAS?
A payer should 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. So if the payment was made on July 24th, the withholding tax payment should be due September 15th.
If payer is on GIRO for WHT payment, deduction date is 25th of the month the tax is due.
So the payment can be made both via GIRO or non-GIRO (other online modes ,etc.)
Are You Getting Doubly Taxed On The Same Income, In Singapore As Well As Another Jurisdiction?
In case the same income is getting taxed in Singapore and another jurisdiction, you can avail the double taxation relief. Following are the steps to claim it –
- For Non-Resident Companies
- Where tax treaties do not apply, tax is to be withheld at prevailing tax rates, whereas, if treaty exists, the ‘Double Taxation Relief’ box is to be checked during e-filing.
- The payer should obtain certificate of residence (COR), from such non-resident company, having prescribed details.
- The payer should submit COR to IRAS, by the due date, which is 31st March of following year, or in case claim is for preceding calendar years, within 3 months of submission of form IR37.
- For Non-Resident Professionals (Consultants, Trainers, Etc.)
- Where tax treaties do not apply, tax is to be withheld at prevailing tax rates, whereas, if treaty exists, claim relief under the ‘Double Taxation Relief’ during e-filing, by checking the checkbox.
- If tax treaty exemption applies, obtain form IR586, signed by non-resident professional.
- The signed copy is to be submitted only if requested by IRAS, and all documents should be retained for 5 years.
What If I Miss The Payment Deadlines?
In case the withholding tax payment is not received by due date (as discussed above), a 5% penalty will be imposed, followed by an additional 1% penalty, if tax remains unpaid 30 days after imposition of 5% penalty (not exceeding 15% of unpaid tax outstanding).
If still remains unpaid, enforcement actions would be taken, like legal action, enforcing travel restrictions and appointing agents like your bank, employer, tenant or lawyer to pay the money to IRAS.
Need Support With Your Taxes?
If you need support regarding withholding tax compliance, feel free to reach out to us. We are a diversified professional service firm, having extensive experience in areas of tax compliance and other consultancy services. We would be happy to be of assistance.