Under Singapore law, a Payer who makes payment of a specific nature to a Payee (a non-resident company or individual) is required to withhold a percentage of that payment and pay the amount withheld to the Inland Revenue Authority of Singapore (IRAS).
The payments that are required to withhold tax are:
- payments for services, interest, royalty, rental and movable property;
- payments to non-resident directors, professionals, public entertainers and international market agents;
- foreigners and permanent residents withdrawing from the Supplemantary Retirement Scheme (SRS) account;
- distribution of Real Estate Investment Trust (REITs)
Definition of non-resident company:
A company is either a tax resident or a non-resident of Singapore. In Singapore, the tax residency of a company is determined by the place in which the business is controlled and managed.
“Control and management” is the making of decisions on strategic matters, such as those on company policy and strategy. Where the control and management of a company is exercised is a question of fact. Typically, the location of the company’s Board of Directors meetings, during which strategic decisions are made, is a key factor in determining where the control and management is exercised.
Conversely, a company is a non-resident when the control and management of the company is not exercised in Singapore.
Do note that the place of incorporation of a company is not necessarily indicative of the tax residence of a company.
Definition of non-resident individual
(a) Foreign professional (non-resident professional)
Foreign professionals are individuals exercising any profession (i.e. persons other than employees) of an independent nature under a contract for service.
(b) Non-resident public entertainer
A public entertainer performing in Singapore can be exercising a profession, vocation or employment.
(c) Foreign board director (non-resident director)
For tax purposes, a board director is a member of the board of directors of a company.
Withholding Tax Rates
The withholding tax rates vary with the nature of income.
Here are the Withholding Tax rates for services, interest, royalty, rent of movable properties
- Interest, commission, fee or other payment in connection with any loan or indebtedness: 15%
- Royalty or other lump sum payments for the use of moveable properties: 10%
- Royalty and other payment made to author, composer or choreographer : 22%
- Payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information: 10%
- Rent or other payments for the use of moveable properties: 15%
- Technical assistance and service fees: Prevailing Corporate Tax Rate
- Management fees: Prevailing Corporate Tax Rate
- Time, voyage and bareboat charter fees for charter of aircraft: Applicable aircraft charter rates
- Time, voyage and bareboat charter fees for the charter of ships: Nil
- Proceeds from sale of any real property by a non-resident property trader: 15%
- Distribution of taxable income made by REIT to unitholder who is a non-resident (other than an individual): 10%
Here are the Withholding Tax rates for non-resident directors, professionals, public entertainers and international market agents
- Payment to Non-Resident Director: 22% (20% prior to Year 2016)
- 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 Entertainer: 10% on gross income (till 31 Mar 2022)
- Commission/Payment to Non-Resident International Market Agent: 3%
You can also download the Basic Withholding Tax Applicability Calculator from IRAS here:
When to file and pay the withholding tax to IRAS
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.
If you require tax filing services, you may contact us at [email protected].
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
The editorial team at Singapore Secretary Services
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