Withholding tax in Singapore
If you’re a non-resident company or individual based in Singapore, you may be charged a Singapore withholding tax. Read on to find out more.
What is Singapore withholding tax?
Singapore withholding tax (known as tax deduction at source in other countries) refers to the tax withheld and paid to the Inland Revenue Authority of Singapore (IRAS), when a non-resident company or individual derives an income from a Singaporean source, for services provided or work done in Singapore. IRAS is the Singapore’s tax authority.
When a Singapore company or individual pays a non-resident for services performed in Singapore, a percentage of that payment must be withheld and paid to IRAS – hence the term withholding tax.
In what situations does Singapore withholding tax apply?
Singapore withholding tax is only applicable to non-resident companies or individuals for:
- Income derived from a Singaporean source
- Services provided or work done in Singapore
- Specific types of payments (refer to the question ‘What types of payments are subjected to Singapore withholding tax?’ below)
Do note that under Singapore tax law, income includes wages or allowances as well as accommodation, airfare and other expenses which are incurred on top of actual service fees.
How is a non-resident company defined for Singapore tax purposes?
For Singapore tax purposes, non-resident companies refer to:
- Companies incorporated outside Singapore that have operations in Singapore
- Singapore-incorporated offices that are managed and/or controlled outside Singapore
- Singapore branches of foreign companies
What types of payments are subject to Singapore withholding tax?
- Interests, commissions, and any other debt- or loan-related fees
Singapore withholding tax applies to interest charged on overdue trade accounts, interest on credit terms paid to a non-resident supplier, and commission or loan fees that are paid to a non-resident. - Royalty, rights of use, and intellectual property
Royalties are subject to Singapore withholding tax at either 10% or at the prevailing corporate rates. Withholding tax also applies to any payments involving the use of commercial, scientific, technical or industrial knowledge for business activities, or the hiring of non-resident experts to render these skills on your behalf. - Management fees (prevailing corporate tax rate)
Singapore withholding tax may apply to payments due to foreign entities that provide management services or help you manage your business. These fees are subject to certain conditions, such as double taxation agreements and if your company is permanently established in Singapore or otherwise. - Services rendered (prevailing corporate tax rate)
Singapore withholding tax payment made to non-resident companies is subject to Singapore withholding tax when you hire them to install equipment, provide technical support, provide training and consultancy services, and other similar services within Singapore. Do note that remotely-provided services are not subjected to withholding tax. - Rent
Rent or payments paid to the non-resident company for movable property will be subject to Singapore withholding tax.
- Interests, commissions, and any other debt- or loan-related fees
How does Singapore withholding tax apply to non-resident professionals?
A non-resident professional (NRP) refers to someone who has spent fewer than 183 days a year in Singapore during the course of providing services in the country. Non-resident professionals are subject to Singapore withholding tax for any type of income that they earn for services rendered in Singapore.
NRPs include the following:
- Foreign professionals, experts and specialists invited by government bodies, statutory boards or private organisations to provide technical expertise in Singapore
- Foreign speakers or academics conducting seminars or workshops in Singapore
- Queen’s Counsels
- Consultants, trainers and coaches
- Public entertainers
If the NRP is informed that his or her services are to be withholding tax-free, then the income they receive is considered as a net payment. The Singapore payer must still pay withholding tax and needs to work out the amount to be paid to IRAS on top of the amount paid to the NRP.
The general withholding tax rate for NRPs is a flat 15% of gross income except in the following cases:
- Payment to non-resident company directors are subjected to 22% withholding tax. This applies to all forms of income (salary, bonus, director’s fees, accommodation, gains from stocks and shares, and other payments)
- Services performed in Singapore by public entertainers is subject to 10% withholding tax till 31 March 2020
What happens if I missed the deadline to pay Singapore withholding tax?
If you’re late in paying your Singapore withholding tax, IRAS will issue a Demand Note and include the late payment penalty (currently 5%).
Not paying the tax and penalty by the due date stipulated in the Demand Note will cost you an additional penalty of 1% for each outstanding month (subject to a maximum of 15%).
We can help you to manage your Singapore withholding tax due dates to ensure you are not charged with penalties.
De-registration
You can cancel your registration when your business stops or when your business is sold as a whole to another person or when your sales figures do not exceed 1 million SGD. You must submit an application form, along with other relevant documents to the tax authority within 30 days from the date of cessation.
I don’t want to be taxed by both the Singapore government and the country where my company headquarters are based. How do I avoid this?
Singapore has double tax agreements (DTA) with many countries in order to prevent companies and individuals from being taxed by both jurisdictions.
If your company operates out of a country that has a tax treaty with Singapore, the DTA may provide relief from double taxation. Do note that this depends on the particular service your company provides, as well as the specific provisions of the DTA in your country.
For more information, refer to our Singapore Double Tax Treaties guide.