Tag: Withholding tax payment

IRAS updates website content on withholding tax

On By taxsgIn Corporate Tax, Withholding Tax

4 March 2016

The Inland Revenue Authority of Singapore (IRAS) has updated its website for guidelines on withholding tax.

Withholding tax is a form of levy placed on payments made to non-resident tax entities including companies, employees, business partners and overseas agents. A person has a legal obligation to withhold a percentage of the payment and pay the amount withheld to the Inland Revenue Authority of Singapore (IRAS), when payments of a specified nature under the Income Tax Act are made to a non-resident.

Any applicable withholding tax has to be deducted and paid to the IRAS, together with the completed Form IR37/A/B/C/D, by the 15th of the second month following the date of payment to the non-resident. Failure to do so will result in the imposition of late payment penalties.

For payments before 1 July 2012, Form IR37/A/B/C/D has to be filed and withholding tax paid by the 15th of the following month from the date of payment to the non-resident.

IRAS has clarified that the date of payment refers to the earliest of the following dates:

  • when the liability to pay the income arises (i.e. the income is due and payable) in accordance with the terms of the agreement/contract. In the absence of an agreement/contract, the date of the invoice is regarded as the deemed date of payment,
  • when the income is credited to the account of the non-resident person (or reinvested, accumulated, capitalised or carried to any reserve or any other account however designated, or otherwise dealt with on its behalf), and
  • when actual payment of the income is made.

If the withholding tax payment is not submitted to IRAS by the due date, a Demand Note will be issued, and a penalty of 5% will be imposed. Payment has to be made within one month to avoid further enforcement actions such as:

  • Appointing the taxpayer’s bank, employer, tenant or lawyer as agent to pay the outstanding money to IRAS,
  • Take legal action.

If the withholding tax payment is not settled within 30 days from the due date, an additional penalty of 1% will be imposed on the withholding tax for each completed month that the tax remains outstanding. The maximum additional penalty imposed cannot exceed 15%.

IRAS is however prepared to waive or reduce the penalty to 5% for first-time voluntary disclosures that meet the conditions of the IRAS Voluntary Disclosure Program.

For further reading, please refer to the IRAS website under the headings of:

  • Beginners’ guide to withholding tax
  • Late payment or non-payment of taxes
  • Withholding tax
  • When to file and pay withholding tax

The above updates had been made by IRAS on 24 and 25 February 2016.

Source: IRAS

Second Protocol to the standing Agreement for the Avoidance of Double Taxation signed between Singapore and Vietnam comes into force on 11 January 2013

On By taxsgIn Corporate Tax, Tax Treaties, Withholding Tax

15 January 2013

Singapore and Vietnam had signed a Second Protocol on 12 September 2012 to amend the existing Singapore-Vietnam Avoidance of Double Taxation Agreement (‘DTA’). The Second Protocol has since come into force on 11 January 2013.

The amendments include revisions to the DTA’s articles on permanent establishment, dividends, interests, royalties and capital gains. The revised DTA also includes the internationally agreed standard for exchange of information to allow the tax authorities of both countries to exchange information that is foreseeably relevant to the correct application of a tax convention as well as for purposes of the administration and enforcement of domestic tax laws of the contracting states.

The original bilateral agreement was concluded on 2 March 1994.

Source: Inland Revenue Authority of Singapore (IRAS)

Second Protocol to Singapore and UK DTA comes into force

On By taxsgIn Latest Tax News, Tax Treaties, Withholding Tax

1 January 2013

On 27 December 2012, the Second Protocol amending the standing Agreement for the avoidance of double taxation (DTA) between Singapore and the United Kingdom came into force.

The Second Protocol provides for lower withholding tax rates for interest, dividend and royalty incomes, and updates the article on Permanent Establishment, compared to the existing DTA. The rates under the treaty are as follows:

• Dividends — dividends paid by a company which is a resident of a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in that other Contracting State. However,

a) dividends paid by a real estate investment trust which is a resident of the United Kingdom may also be taxed, according to its laws, in the United Kingdom. However, if the beneficial owner of the dividends is a resident of Singapore, the tax so charged shall not exceed 15% of the gross amount of the dividends

b) distributions paid by a real estate investment trust which is organised in Singapore may also be taxed, according to its laws, in Singapore. However, if the beneficial owner of the distributions is a resident of the United Kingdom, the tax so charged shall not exceed 15% of the gross amount of the distributions.

• Interest — 5%. Exempted from tax if paid between the relevant government authorities of the contracting states.
• Royalties — 8%.

The Protocol was signed on 15 February 2012.

Source: Inland Revenue Authority of Singapore and Government Gazette

Singapore and Jersey sign agreement for the avoidance of double taxation

On By taxsgIn Latest Tax News, Tax Treaties, Withholding Tax

18 October 2012

On 17 October 2012, Singapore and Jersey signed an agreement for the avoidance of double taxation (“DTA”).

The DTA includes the internationally agreed Standard for the exchange of information for tax purposes upon request, and provides greater clarity on taxing rights and minimises the scope of double taxation between the two nations. The withholding tax rates under the treaty are as follows:

  • Dividends — Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State and which are beneficially owned by that resident shall be taxable only in that other State. Since Singapore’s domestic withholding rate for dividends is nil, dividends will be exempt from withholding tax in Singapore.
  • Interest — 12%. Exempted from tax if paid between the relevant government authorities of the contracting states.
  • Royalties — 8%.

The DTA is awaiting ratification and does not have the force of law.

The full text of the DTA is available on the IRAS website.

Source: Inland Revenue Authority of Singapore (IRAS)

Singapore and the Isle of Man signed an agreement for the avoidance of double taxation

On By taxsgIn Latest Tax News, Tax Treaties, Withholding Tax

24 Sep 2012

On 21 September 2012, Singapore and the Isle of Man signed an agreement for the avoidance of double taxation (“DTA”).

The DTA includes the internationally agreed Standard for the exchange of information for tax purposes upon request, and provides greater clarity on taxing rights and minimises the scope of double taxation between the two nations. The withholding tax rates under the treaty are as follows:

  • Dividends —Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State and which are beneficially owned by that resident shall be taxable only in that other State. Since Singapore’s domestic withholding rate for dividends is nil, dividends will be exempt from withholding tax in Singapore.
  • Interest — 12%. Exempted from tax if paid between the relevant government authorities of the contracting states.
  • Royalties — 8%.

The DTA is awaiting ratification and does not have the force of law.

The full text of the DTA is available on the IRAS website.

Source: Inland Revenue Authority of Singapore (IRAS)