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Withholding Tax

Withholding-Tax

The withholding tax is imposed on the non-resident professionals and businesses which derive income from Singapore. The tax rates range from o% to a maximum of 20% depending on the types of services offered by such professionals and companies. Below is the Singapore withholding tax guide which sheds more light on this type of tax.

The Singapore withholding tax also known as the tax deduction source in many countries, is a tax levied on non-resident individuals and companies that derive income from a Singapore source for the services delivered or work done in Singapore. Whenever a Singapore resident company or individual remunerates a non-resident individual or company for the services offered, a certain amount of that payment is withheld and handed over to the Inland Revenue Authority of Singapore (IRAS) as part of the withholding tax system. This system is not applicable to the Singapore residents or companies.

Withholding Tax Levied on Non-Resident Companies

A company that is incorporated outside Singapore or a Singapore incorporated company treated as a non-resident for tax purposes under the taxation system of Singapore is termed as a non-resident company and fall under the purview of the withholding tax system of Singapore for certain types of payments:

  • Interest charged on overdue trade accounts of your company that is paid to the non-resident supplier, comes under withholding tax system. Also, any fees, commission etc paid to the non-resident companies must go through the withholding tax system of Singapore. The withholding tax rate for this type of payment is 15%.
  • The royalties paid to the non-resident companies and the payments made for the use of commercial, technical, scientific or industrial knowledge for business activities or employing a foreign professional to deliver these skills for you comes under withholding tax system. The rate applicable for this kind of payments is 10%.
  • Apart from the aforementioned payments, management services paid to foreign companies and service charges paid to a hired company for the installation of equipment, consultancy, training etc also come under withholding tax of Singapore taxation system.
  • The rent paid to non-resident companies that lease a movable property in Singapore is subject to 15% withholding tax.

Withholding Tax Levied on Non-Resident Professionals

An individual who has spent less than 183 days in Singapore is known as a Non-Resident Professional (NRP). The NRPs are subject to withholding tax for all the services and work provided by them in Singapore. The NRPs include:

  • Foreign speakers conducting seminars or workshops in Singapore.
  • Foreign professionals or experts invited by the government of Singapore.
  • Queen’s counsels, public entertainers, consultant, trainers and coaches.

If the NRP is informed that his/her services are withholding tax-free then the payment paid to them is termed as net payment. The general withholding tax rate for individuals is a flat 15% of gross income, barring the below cases:

  1. Withholding tax rate for royalty payments, payments made for the use of commercial, technical, scientific or industrial information and the payments to non-resident directors that include salary, bonuses, perks, share and stock gains etc is 20%.
  2. For the non-resident public entertainers, the withholding tax rate is 10% until March 31, 2015.

Singaporeaccounts.com provides guidance on the withholding tax system of Singapore both for the non-resident companies and professionals. We also take expertise in guiding our customers to avoid the double tax.

Please feel free to contact us on +65 6536 0036 or drop in an email at info@accountingservice.com.sg

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Singapore Taxation OverviewTax System & Tax RatesGST–Goods and Services TaxPersonal TaxCorporate/Company TaxProperty TaxDouble Tax TreatiesWithholding TaxTax for Non-ResidentsTaxation for InternsTax CalculatorECI (Estimated Chargeable Income)

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