According to the law in Singapore, when a payer makes a payment like royalties, management fees, or interest to a non-resident company or payee for services provided in the country, a certain percentage of that payment must be withheld and paid to the Inland Revenue Authority of Singapore (IRAS). This is called Withholding Tax.
The rate of tax is determined based on the type of payment to the non-resident payee. Let’s have a look at the table below:
|Payment Type||Tax Rate|
|Commission, interest, or fee linked to any loan||15%|
|Royalty and other payments used for moveable properties||10%|
|Payment used for technical, industrial, scientific, or commercial knowledge||10%|
|Rent and other payments used for moveable properties||15%|
|Service fee or technical assistance||17%|
|Payment to foreign firms/Non-Resident Professional||15% (gross salary) or
22% (net income)
|Payment to Non-Resident Public Entertainer||10% on gross income (till 31 March 2020)|
|Payment to Non-Resident Director||22%|
|Payment/commission to Non-Resident International Market Agent||3%|
|Voyage, time, and bareboat charter fees for aircrafts||Based on aircraft charter rates|
|Voyage, time, and bareboat charter fees for ships||NIL|
|Sale of any property by a non-resident property trader||15%|
|Circulation of taxable income to a non-resident unitholder by REIT (excluding individuals)||10%|
Based on the law, if the partnership comprises non-resident individuals or partners, then the payer has to withhold a certain portion from the payments made to the partnership with respect to the services derived by the partnership.
In order to eliminate the complications of fulfilling tax requirements for partnerships, S45 has decided to waive off the requirement to withhold tax for partnerships with at least one Singaporean partner. However, the waiver is given only if your partnership in Singapore files the annual tax return by filing Form P to declare its income, which includes payments where withholding tax is applicable.
Partnerships with only non-resident partners must submit an undertaking from the main office of the partnership that if the partnership in Singapore fails to pay tax arising from the waiver, then the head office will be liable to pay the outstanding tax.
Furthermore, in case of any alterations in the composition of partners from a resident partner to a non-resident partner, the Comptroller must be notified immediately. To enjoy the waiver, the partnership must submit the undertaking from the head office along with the statement of change of partners to the Comptroller.
Singapore has tax agreements with several countries, where you can avoid being taxed twice on your income by the Singapore government and another jurisdiction or treaty partner. This agreement is known as the Double Taxation Agreement (DTA).
A DTA explains the taxing rights to an individual between Singapore and the treaty partner on different kinds of income arising from businesses between the jurisdictions. The DTA also offers exemption or reduction of tax on certain kinds of income.
There are 2 other ways to avoid being taxed twice:
The withheld tax form has to be e-filed through myTax Portal only. The payer must e-file and pay the withholding tax to IRAS maximum by the 15th day of the second month from the payment date to the non-resident.
Furthermore, in case you are on GIRO for withholding the tax payment, the deductions will be on the 25th day of the second month after the due date of the payment. But, if the GIRO deduction falls on a public holiday, then the deduction takes place on the next business day. The payment date refers to the earliest of the following dates:
Follow the steps below to e-file your withholding tax:
Important note: You can only use your CorpPass to log into myTax Portal. IRAS Pin/SingPass will not be accepted.
Always remember to pay your taxes on time or else you may have to pay a late payment fee of 5%. If you still fail to pay the tax within 30 days of receiving a notification, an extra 1% will be charged as penalty every month on the unpaid withholding tax for up to 15 months of unpaid tax (15%).