Singapore’s withholding tax is the tax withheld and paid by non-resident companies or individuals that profit from a Singaporean source, such as goods and services provided or work done in Singapore. This tax is taken from this payment or profit and paid to the Inland Revenue Authority of Singapore (IRAS).
Who Qualifies for Withholding Tax
Non-resident companies are defined as:
- Companies that were incorporated outside Singapore and have operations within Singapore
- Companies that were incorporated in Singapore but are managed or controlled outside Singapore
- Foreign companies with branches in Singapore
Non-resident individuals are defined as anyone who has spent less than 183 days a year providing services in Singapore. Any income made is subject to Singapore’s withholding tax with a flat rate of 15% of their gross income.
Furthermore, non-resident individuals are also defined as:
- Foreign professionals invited by the government bodies, statutory boards or organizations to apply their technical skills and knowledge in Singapore
- Foreign speakers or academics that are conducting activities and events in Singapore (i.e. seminars, talks, workshops)
- Queen’s counsels
- Consultants, trainers and coaches
- Public figures and entertainers
However, there are cases that may not follow, such as in the following situations:
- Non-Resident Company Directors: Payment will be subjected to 22% withholding tax and will apply to all forms of income such as salary, bonuses, accommodation, profit from stocks and shares and more
- Public Figures and Entertainers: Any foreign figure or entertainer such as artists, athletes, musicians and more are subjected to 10% withholding tax.
Payments Subjected to Withholding Tax
The following payments are subjected to Singapore’s withholding tax:
- Interest, Commissions or any other fees related to debts or loans: Interest charged from overdue trade accounts and commission or loan fees paid to a non-resident supplier or a non-resident person. These are subjected to 15% withholding tax.
- Intellectual Property: Royalties are subjected to either 10% - 22% withholding tax or the prevailing corporate rates at the time. This also applies to payments for the use of commercial, scientific, or industrial knowledge for business purposes, as well as the hiring of a non-resident professional to render services for your company.
- Management Fees: Payments made to foreign entities that provide services for your business. Apart from withholding tax, these fees are also subjected to other conditions.
- Services Rendered: Payment made to non-resident companies that are hired to install equipment, provide services and other related activities within Singapore. Remote services provided are not included in this.
- Rent: Payment to a non-resident company for movable property. These are subjected to 15% withholding tax.
- Proceeds: Profit made from any sale of any real property by a non-resident property trader will be subjected to 15% withholding tax.
Paying Withholding Tax
Payers must file and pay their withholding tax due to IRAS by the 15th of the second month from the date of payment to the non-resident entity. Any late payment will result in receiving a Demand Note from IRAS, as well as a 5% late payment penalty that will only increase with every outstanding month from the date specified in the note.
A good way to determine the due date of payment is to choose the earliest of these following situations:
- Date of contract
- Date of invoice
- Date when income was credited to non-resident account
- Date of payment
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