Introduction to Singapore Withholding Tax

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Withholding tax is a tax on payments made to non-residents including employees, business partners and overseas agents. Here is a quick overview of withholding tax and how it affects your business.

A non-resident is liable to pay income tax on Singapore-sourced income. Under the law, a person has a legal obligation to withhold a percentage of the payment, when he makes payments of a specified nature under the Singapore Income Tax Act, to a non-resident.

When you make payments of a specified nature to a non-resident, you must withhold a certain percentage of that payment as “withholding tax”. What Types Of Payments Are Subject To Withholding Tax?

 

Types of payment include:

  • payment of commission fees to overseas agents
  • payment of director’s fees to non-resident directors
  • payment of professional fees to offshore accountants

 

Section 45, 45A, 45B & 45D

  • Interest
  • Royalties
  • Management fees and service fees
  • Rental from use of movable properties;
  • Non-resident director’s remuneration;
  • Gains from real property transaction

 

Section 45E

  • Supplementary Retirement Scheme (SRS) withdrawal made by foreigners and Singapore permanent residents.

 

Section 45F

  • Professional service fees for non-resident professionals.

 

How are the Singapore Withholding Tax Rates?

It depends on the type of payment you are making.

  • For director’s salary, management fees, technical and other service fees, the withholding tax rate is the same as corporate tax rates. The current corporate tax rate is 20%.
  • For time charter fees, voyage charter fees and bareboat charter fees, the withholding tax rate is 1% – 3%.
  • For other types of payments, the withholding tax rate is 10% or 15%.

Note: Where a double tax agreement is applicable, the rates specified in the agreements of the respective countries would apply.

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