If you have just arrived in Singapore and start earning your first dollar, you may be charged a Singapore Withholding Tax.
Singapore withholding tax (known as tax deduction at source in other countries) is a payment that a company will withheld and pay to the Inland Revenue Authority of Singapore (IRAS) when a non-resident company or individual receive a payment from work performed in Singapore.
When do you need to Withhold the Tax?
- Income sourced in Singapore
- Non-resident works or carries out any services in Singapore
- Payments made only to non-residents (Individuals & Companies)
Withholding Tax for Non-Resident Companies
- Commission, interest and fee in connection with any loan are tax at 15%
Singapore withholding tax applies to interest charged on overdue trade accounts, interest on credit terms paid to a non-resident supplier, and commission or loan fees that are paid to a non-resident.
- Royalty, rights of use, and intellectual property are tax at 10% or at prevailing corporate rates
The use of commercial, scientific, technical or industrial knowledge for business activities, especially when you hire a non-resident to render these skills on your behalf.
- Management fees are tax at prevailing corporate tax rate
These fees are subject to certain conditions, such as double taxation agreements if you company is established in Singapore
- Services rendered are tax at prevailing corporate tax rate
Getting a non-resident companies to install equipment, provide technical support, provide training and consultancy services, and other similar services within Singapore.
- Rent are tax at 15%
Rent or payments paid to the non-resident company for movable property.
Withholding Tax for Non-Resident Individual
A non-resident Individual is a foreigner who is present in Singapore for under 183 days in a calendar year.
- Consultants, Trainers, Coaches, etc.
- Public entertainers e.g. artistes, musicians, sportsmen, etc.
- 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
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%.
- 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
A Double Taxation Agreement (DTA) is a government level agreement, where taxation in one country is recognized by the other country. Singapore has signed Avoidance of Double Taxation Agreements (DTA) with many countries. The need for DTA arises out of the imbalance in tax collection on global income of individuals. If a person aims to do business in a foreign country, he/she may end up paying income taxes in both cases, i.e. the country where the income is earned and the country where the individual holds his/her citizenship or residence.
You may refer to the list of Singapore Double Taxation Agreements.
Singapore Double Taxation Agreements – Link “ https://www.iras.gov.sg/irashome/Quick-Links/International-Tax”
E-File Withholding Tax by yourself
With effect from 1 Sep 2018, the withholding tax form can only be filed electronically via CorpPass. CorpPass will be the only login method for online corporate transactions with the Government. All payers (except for individuals) must first set up the authorisation in CorpPass for its users before they can log in to IRAS digital services.
For foreign individuals (who are ineligible for SingPass), the IRAS Unique Account has replaced IRAS PIN. To e-file WHT, you need to register and activate the IRAS Unique Account first.
E-file Withholding Tax by Company Staff/Third Party
The person e-filing the WHT has to be assigned with the S45 Withholding Tax (Filing) and/or S45 Withholding Tax (GIRO Deduction Details) e-Services in CorpPass by the CorpPass Administrator (CPA)/Sub-Admin of the company. However, the CPA/Sub-Admin does not need to assign the S45 Withholding Tax (GIRO Deduction Details) e-Service if the user is not required to view the GIRO deduction details.
However, if the WHT is e-filed by a third party (e.g. tax agent), the third party must be authorised in CorpPass to act for the company.
Determine the exact date of payment
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.
- 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.
- 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).