Withholding Tax in Singapore

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.

Payments and Their Withholding Tax Rates

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%
Management fee 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%

Withholding Tax and Non-Resident Partnerships

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.

How to Avoid Double Taxation

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.

How Else Can I Avoid Double Taxations

There are 2 other ways to avoid being taxed twice:

  • Certificate of Residence (COR): A COR is a certificate stating that a partnership is a resident of Singapore, which is controlled and managed in the country. This letter is needed to claim benefits under DTAs. You can apply for a COR through myTax Portal. If you are a non-resident partner, you may also enjoy the benefits of DTAs (subject to fulfilling certain conditions).
  • Double Tax Relief (DTR): You can be taxed if your company receives foreign income in Singapore. If the benefit under DTA is a reduction of tax instead of an exemption, the company in Singapore will have to pay tax in the foreign country as well. DTA, in this case, will help you avoid this double taxation by letting you claim a credit of the foreign tax payable on the same amount. This credit is called DTR.

Date of Filing and Paying Withholding Tax

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:

  • Payment is due and payable as per the contract or agreement or the date of invoice if there is no agreement or contract.
  • Payment is credited to the designated account of the non-resident.
  • The actual payment date.
  • Director’s Fees: Payment must be made on the date that was voted and approved at a general meeting.

How to do I e-File?

Follow the steps below to e-file your withholding tax:

  • Authorise a person from your company to e-file withholding tax. This step is required only if you are e-filing for the first time or if you are re-authorising another person for the electronic filing.
  • Log into myTax Portal and click on ‘Client Tax Matters’ or ‘Organisation/Business Tax Matters’, whichever is pertinent to your company.
  • Fill up the details and read the instructions in the acknowledgement page for payments to IRAS by the set date.

Important note: You can only use your CorpPass to log into myTax Portal. IRAS Pin/SingPass will not be accepted.

Other ways to pay tax:

  • GIRO.
  • Internet banking available with BOC, DBS/POSB, CIMB, HSBC, Maybank, ICBC, RHB, OCBC, SBI, Standard Chartered, and UOB.
  • DBS PayLah!
  • Phone banking through UOB, OCBC, and DBS/POSB.
  • AXS Stations or online platforms.
  • SAM Kiosk or online platform.
  • Funds transfer.
  • Cheque or Cashier’s Order.
  • Telegraphic transfer.
  • Funds transfer through internet banking

Points to Remember Before E-filing:

  • There are 2 ways to submit e-filing – a single file through S45 Offline Data-Entry (ODE) or S45 Online e-Filing.
  • Tax amount reported in the e-filing form must be in Singapore dollars. If the payment is in a foreign currency, then use the foreign currency selling rate as applicable on the payment date to convert the amount into Singapore dollar.
  • Do not mention the cents while you declare the taxable income (gross).
  • If you are applying for DTR, please select the appropriate relief/incentive on the e-filing form.
  • Only authorised Approvers can submit the e-filing form to IRAS.

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%).

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