What is 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 IRAS, when payments of a specified nature under the Income Tax Act are made to a non-resident.
What are the types of payments subject to withholding tax?
Under the Income Tax Act, the following payments as subject to withholding tax:
– interest, commissions, fees and other payments relating to any loan or indebtedness;
– royalties or other lump sum payments for the use of or the right to use movable property;
– know-how payments for the use of scientific, technical, industrial or commercial knowledge or information;
– technical assistance or service fees;
– management fees;
– rent or other payments for the use of any movable property;
– directors’ remuneration;
– specified distributions by unit trusts;
– proceeds from the disposal of real property where the seller is a non-resident property trader;
– certain withdrawals made by Supplementary Retirement Scheme (SRS) members who are non-Singapore citizens;
– payments to non-resident individuals or foreign firms of any income accruing in or derived from Singapore from any profession or vocation exercised in Singapore;
– distributions made by a trustee of a real estate investment trust;
– payments to any non-resident public entertainer or his/her representative; and
– payments of commission or other payments by any person to a non-Singapore resident junket promoter.
What are the withholding tax rates for income derived by non-residents?
| Dividend payments |
0% |
| Interest, commissions, fees and other payments in connection with any loan or indebtedness | |
| – For operations not carried out in Singapore by a non-resident person |
15% |
| – For operations carried out in Singapore by a non-resident person (other than individuals) |
17% |
| – For operations carried out in Singapore by a non-resident individual |
22% |
| Royalties or other lump sum payments for the use of or the right to use any movable property | |
| – For operations not carried out in Singapore by a non-resident person |
10% |
| – For operations carried out in Singapore by a non-resident person (other than individuals) |
17% |
| – For operations carried out in Singapore by a non-resident individual |
22% |
| Know-how payments for the use of or the right to use scientific, technical, industrial or commercial knowledge or information | |
| – For operations not carried out in Singapore by a non-resident person |
10% |
| – For operations carried out in Singapore by a non-resident person (other than individuals) |
17% |
| – For operations carried out in Singapore by a non-resident individual |
22% |
| Technical assistance or service fees |
17% |
| Management fees |
17% |
| Rent or other payments for the use of movable property | |
| – For operations not carried out in Singapore by a non-resident person |
15% |
| – For operations carried out in Singapore by a non-resident person (other than individuals) |
17% |
| – For operations carried out in Singapore by a non-resident individual |
22% |
| Non-resident board directors’ remuneration or fees |
22% |
| Proceeds from any sale of real property where the non-resident seller is a real property trader |
15% |
| Professional fees |
15% (22% if the non-resident professional elects to be taxed on net income) |
| Distributions made by a trustee of any real estate investment trust |
10% for distributions made during the period 18 February 2005 to 31 March 2020 |
| Payments to non-resident entertainers or their representatives |
15% (10% for income due and payable to the non-resident entertainer during the period 22 February 2010 to 31 March 2020) |
When must the withholding tax be paid?
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.
In an administrative circular, the IRAS 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.