Guide to Singapore Withholding Tax

Withholding tax in Singapore is deducted from companies and individuals deemed as non-residents who source their income within Singapore through work or service provided. A percentage of an individual’s or company’s income is deducted to the payment made and remitted to Inland Revenue Authority of Singapore or IRAS. Resident companies and individuals are exempted from withholding tax.

Withholding Tax Overview

There are four simple conditions wherein a withholding tax in Singapore is applied:
  1. The income comes from a source within Singapore;
  2. The income is generated by a non-resident individual or company;
  3. The service or work is done in Singapore; and
  4. The withholding tax can be deducted only in certain types of work or services rendered.

Payments Subject to Withholding Tax

Loan or debt-generated fee, interest, or commission

A 15% withholding tax rate is deducted to payments on:
  1. Interests from credit terms and overdue trade accounts made to non-resident suppliers
  2. Any fees from commissions or loans paid to a non-resident.

Payment or royalty for using movable properties

A 10% withholding tax is applied to fees made to non-residents for any royalties, unless there are other existing corporate rates applicable. The same applies to payment due to a foreign professional who rendered industrial, commercial, technical, or scientific service.

Management fees

The amount of withholding tax is dependent on prevailing rate of corporate tax. This is applicable to payments made to foreign enterprises that extend management services in Singapore. Exemptions can be claimed if the service provided falls under Double Taxation Agreements and other relevant laws.

Services income

Professional fees including allowances paid to hired non-resident individuals and companies that provide services like consultancy, training, technical support, equipment installation, and other tasks performed in Singapore. If the service is provided remotely, like web-conferencing or through the internet, the payment is exempted from withholding tax.

Rental income

A 15% withholding tax is applied to payments made to non-resident company for the lease of movable property within Singapore

Withholding Tax Applied to Non-resident Professionals

Any foreign individual providing professional services in Singapore whose length of stay does not exceed 183 days is considered a non-resident professional. The fees that these professionals will receive are subjected to withholding tax. Examples of NRPs are- Public entertainers, Coaches, trainers, and consultants, Queen’s counsels, Academics or foreign speakers holding workshops or seminars in Singapore etc.

Payment to Non-resident company directors

fees are also subject to 20% withholding tax. Such fees include any bonuses, salary, accommodation allowance, gains from shares and stocks, and others.

Double Tax Safety Net

A double tax agreement (DTA) has been signed by Singapore authorities with other countries to avoid individuals and companies to be taxed separately for the same payment. The foreigner can use the Withholding tax certificate to get equivalent deduction from his tax liability in home country.