Introduction to Withholding Tax in Singapore
Under the Singapore Income Tax Act, a Singapore entity or individual making a payment of a specified nature to a non-resident company or individual (the “payee”) is required to withhold a percentage of that payment and remit the amount withheld — known as withholding tax — to the Inland Revenue Authority of Singapore (IRAS).
Non-Resident Company
In Singapore, the tax residency of a company is determined by where the business is controlled and managed. A key factor in determining where control and management is exercised is the location where the company’s board of directors meets to make strategic decisions.
A company is considered a tax resident in Singapore when the control and management of the company is exercised in Singapore. As a result, a Singapore branch office of a foreign company is considered a non-resident, since its control and management sits with its parent foreign company. The place of incorporation doesn’t, by itself, determine a company’s tax residency.
Non-Resident Individual
A non-resident individual is someone who is employed or physically present in Singapore for less than 183 days in a calendar year. For individuals, withholding tax applies only to non-resident professionals, non-resident public entertainers, and non-resident directors.
A foreign professional is an individual exercising a profession or vocation independently under a contract for service, rather than as an employee of a company. Examples include:
- A foreign expert invited by government bodies, statutory boards, or private organisations to share their technical expertise in Singapore
- A foreign speaker or academic conducting seminars or workshops
- King’s Counsel
- A consultant, trainer, or coach
- An individual operating through a foreign firm
A public entertainer includes:
- Stage, radio, or television artistes and musicians
- Athletes competing in sporting events or tournaments
Foreign individuals who work behind the scenes — such as crew, choreographers, and directors in the entertainment industry, or horse trainers, coaches, and personal trainers for sporting events — are not considered public entertainers.
A foreign professional or public entertainer is a non-resident when they’re in Singapore for less than 183 days in a calendar year.
Withholding tax for non-resident directors is covered in more detail in Tax Treatment on Remuneration of Non-Resident Directors.
What Is Subject to Withholding Tax?
Withholding tax applies only to payments of a specified nature, listed under Section 45 of the Singapore Income Tax Act. The applicable rate depends on the nature of the payment. However, where Singapore has an Avoidance of Double Taxation Agreement (DTA) with the country in which the non-resident resides, the rate specified in that DTA applies instead, and may be lower than the standard rate.
The types of payment and their applicable rates are listed on IRAS’s types of payment and withholding tax rates page.
When to File and Pay Withholding Tax
E-filing and payment of withholding tax are due on the 15th of the second month from the date of payment to the non-resident. The date of payment is the earliest of the following:
- When the payment is due and payable under the agreement or contract, or the date of the invoice if there’s no agreement or contract.
- When payment is credited to the account of the non-resident, or to any other account designated by the non-resident.
- The date of actual payment.
Late penalties apply when payment and filing aren’t received by the due date. If the tax remains unpaid by the due date:
- A penalty of 5% is imposed on the unpaid tax.
- An additional penalty of 1% is imposed for each completed month the tax remains unpaid beyond 30 days from the due date, up to a maximum penalty of 15%.
How to File
From 1 July 2016, withholding tax can only be filed electronically, through the S45 digital services on myTax Portal. Access is authorised through Corppass, which you sign in to with your Singpass credentials rather than a separate Corppass password. It is an offence under Section 94(2) of the Income Tax Act not to file withholding tax electronically. When e-filing, the payer selects the applicable nature of payment.
Multiple Payments for a Single Engagement
If a payer makes multiple payments within a 60-day period to the same non-resident professional or public entertainer for the same engagement, the payments can be consolidated into a single e-filing and payment to IRAS. The due date is then the 15th of the second month from the date of the last payment to the non-resident.
Claiming Relief or Exemption Under a Double Taxation Agreement (DTA)
If the non-resident resides in a country with which Singapore has a DTA, the rates specified in the agreement apply instead of the standard withholding tax rates.
Singapore continues to negotiate and ratify treaties, so treat the list rather than any headline count as the authority. Check whether a particular country is covered, and on what terms, against IRAS’s current list of DTAs before applying a treaty rate.
A non-resident company can use the S45 Double Taxation Relief Tax Rate Calculator for Companies to determine whether it’s eligible for double taxation relief or exemption, and to find the applicable rate under the DTA. Where a tax treaty applies, the payer must:
- Check the “Double Taxation Relief” box during e-filing.
- Obtain the original Certificate of Residence (COR), certified by the foreign tax authority, from the non-resident payee.
- Submit the COR to IRAS by 31 March of the following year (if the claim is for the current year), or within 3 months from the date the withholding tax is e-filed (if the claim is for preceding years).
A non-resident professional can use the Tax Treaty Calculator for Non-Resident Professionals (Form IR586) to determine whether they’re eligible for tax treaty exemption. Where a tax treaty applies, the payer must:
- Check the “Claim for relief under Avoidance of Double Taxation Agreement (DTA)” box during e-filing.
- Obtain a signed copy of Form IR586 from the non-resident professional. This doesn’t need to be submitted to IRAS unless requested, but all documents and records must be retained for 5 years.
Reference
This guide is intended as a general reference only. How these rules apply to your specific circumstances will depend on your particular facts — seek professional advice regarding any tax issue you encounter rather than relying on this guide alone.