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Withholding Tax Services in Singapore
Fee for Withholding Tax Services in Singapore
|Tax Service||Fee (SGD)|
|Submission of withholding tax form||From $300 (W/GST $321) per submission|
Withholding tax is widely known as tax deduction at source. In Singapore, it is applicable to certain types of payments to non-resident individuals and companies.
Generally, Singapore withholding tax is the tax charged to a non-resident company or individual that derives income from a Singapore source for providing services or carrying out work in Singapore. When payment is made by a Singapore company or individual to a non-resident for services, a certain percentage of that payment is required to be withheld. The withheld amount is to be reported and paid to the Inland Revenue Authority of Singapore (“IRAS”).
Do note that Singapore withholding tax is not applicable to Singapore resident individuals and Singapore resident companies.
Withholding Tax Overview
The applicability of Singapore withholding tax can be determined by the factors below:-
- Applicable only on income sourced in Singapore.
- Applicable to payments made only to non-residents (individuals, companies, professionals, overseas agents etc.)
- Applicable only if the non-resident works or carries out any services in Singapore.
- Only specific payment types (outlined in the Singapore Income Tax Act) are subject to withholding tax.
Withholding Tax for Non-Resident Companies
Specific types of payments that attract withholding tax for non-resident companies:
Interest, commission, fee in connection with any loan or indebtedness
Singapore withholding tax applies when interest is charged on overdue trade accounts and interest on credit terms paid to a non-resident supplier. Payment of withholding tax is also required for any fees as a result of a commission or loan that is paid to a non-resident. Withholding tax rate for such payments is 15%.
Royalty or other payments for the use of or the right to use any movable property
Royalties paid to a non-resident company is subject to withholding tax, either a certain percentage or at the prevailing corporate tax rate. It is also due on payments for exploiting commercial, scientific, technical or industrial knowledge for business activities or hiring a foreign expert to render these skills on your behalf. Withholding tax rate for this type of payment is 10%.
Under certain conditions, in view of the availability of Double Taxation Agreements and whether or not a foreign company has a permanent establishment in Singapore, withholding tax may apply for payments due to foreign entities that provide management services. Withholding tax rate for such payment is the prevailing corporate tax rate.
Singapore withholding tax may have to be charged for hiring a non-resident company to provide services such as installing equipment, technical support, training, consultancy and other work that takes place in Singapore. Payment of withholding tax is only applicable for services rendered physically in Singapore. If services are provided remotely, such as via the Internet, then you do not have to withhold payment for tax purposes as it is considered outside Singapore. Where withholding tax is applicable, the tax rate is the prevailing corporate tax rate.
The rent paid to a non-resident company that leases movable property in Singapore is subject to withholding tax. Withholding tax rate for this type of payment is 15%.
For tax withheld at the prevailing corporate tax rate, non-resident companies are allowed to claim a refund for any expenses incurred by providing certified accounts to the IRAS for consideration.
Withholding Tax for Non-Resident Professionals
A non-resident professional is a foreign professional who is present in Singapore for a period of less than 183 days in a calendar year. Non-resident professionals are individuals exercising any profession (i.e. persons other than employees) of an independent nature under a contract for service and includes:
- Consultants, trainers and coaches
- Public entertainers
- Foreign speakers or academics conducting seminars or workshops in Singapore
- Foreign professionals, experts and specialists invited by government bodies, statutory boards or private organisations to provide technical expertise in Singapore
- Queen’s Counsels
Non-resident professionals are subject to withholding tax for any type of service, consultancy or other work provided for a fee within Singapore. Income is defined as all wages, expenses and fees that are paid to the individual. This includes accommodation, airfare and other expenses on top of the actual fee for services.
For payments to non-resident individuals, the general withholding tax rate is a flat 15% of gross income except the following cases:
- Payment to non-resident company directors is subject to withholding tax rate of 22%. It applies to all forms of income, be it salary, bonus, director’s fees, accommodation, gains from stocks and shares and other payments.
- Withholding tax rate is reduced from 15% to 10% if the income for the services performed in Singapore is due and payable to the non-resident public entertainer during the period from 22 Feb 2010 to 31 Mar 2020.
Avoidance of Double Taxation
Singapore has signed avoidance of double taxation agreements (DTA) with many countries in order to prevent companies and individuals being taxed by both jurisdictions. If a company operates out of a country that has a tax treaty with Singapore, the DTA may provide a lower withholding tax rate and relief from double taxation, depending on the particular service provided and the provisions of the DTA. You may refer to the list of Singapore Double Taxation Agreements.
Deadline to E-File Withholding Tax
With effect from 1 July 2016, the withholding tax form can only be filed electronically via the online tax portal for withholding tax payment to IRAS.
Withholding tax must be e-filed and paid to the IRAS by the payer on the 15th of the second month from the date on which payment is made to the non-resident. For example, if the tax amount is withheld by the payer in the month of July, the deadline to pay the tax to IRAS will be the 15th of September. To comply with the deadline, it is essential to understand the notion of “date of payment”.
To determine the exact date of payment, the payer should consider the earliest of the following:
- When the payment is due and payable based on the agreement or contract, or the date of the invoice in the absence of any agreement or contract (credit terms should not be taken into consideration).
- When payment is credited to the account of the Non-Resident or any other account(s) designated by the Non-Resident
- The date of actual payment
- Director’s Fees: The date of payment for director’s fees is the earliest of the payment date or the date the payment was voted and approved (Example: at the Company’s Annual General Meeting).
Contact us today at firstname.lastname@example.org for assistance to determine and to comply with the Singapore withholding tax requirements.