What Singaporeans Should Know About Withholding Tax

When a non-resident firm or person with a Singapore address receives a paycheck, a Singapore withholding tax may be applied. To learn more, keep reading.

What does it mean to withhold taxes in Singapore?

For non-resident companies and individuals that receive payment for services or labor performed in Singapore but is not Singapore residents, the tax deducted and paid to the Inland Revenue Authority of Singapore (IRAS) is known as “tax deduction at source” in other countries. An organization called the Inland Revenue Agency of Singapore (IRAS) serves as Singapore’s tax collector.

There is a charge called Withholding Tax (Section 45) that must be paid to Singapore’s Inland Revenue Authority (IRAS) when a company or individual in Singapore pays a non-resident for services rendered in Singapore.The Singapore withholding tax is applied in the following situations.

Non-resident businesses and individuals are only subject to Singapore withholding tax in the following circumstances:

company registered office

Having a source of income based in Singapore

Singaporean services are provided, and the labour is done in the city-state itself.

What are the sorts of payments that are exempt from Singapore withholding tax?

It is important to remember that income in Singapore is defined by law to include not just service fees but also salary or allowances and other expenditures such as accommodation, travel and other costs.

What is the definition of a non-Singapore tax-resident firm?

The following are the definitions of non-resident companies in Singapore for tax purposes:

Firms that have their headquarters outside of Singapore yet do business there are referred to as foreign-owned enterprises (FOE) (FTEs).

Management and/or control of an office registered in Singapore from another place.

Branches of foreign firms in Singapore are referred to as such.

Can you provide me with a list of payments in Singapore that are subject to withholding tax?

Expenses linked with a loan or debt is mentioned, including interest, commissions, and any additional costs.

Interest on past-due trade accounts, interest on credit terms extended to a non-resident supplier, and commission or loan fees paid to a non-resident supplier are all subject to withholding taxes in Singapore.

Intellectual property includes royalties, usage rights, and intellectual property

Withholding tax in Singapore is imposed at a rate of 10% or the corporation rate, whichever is greater, on royalties received. If you employ commercial, scientific, technical or industrial skills in your company operations or engage non-resident experts to supply these abilities on your behalf, you will be liable to withholding tax on such payments.

Administration fees (prevailing corporate tax rate)

Singapore withholding tax may apply to payments due to overseas organizations that provide management services or help you in operating your business. A number of conditions must be satisfied before you may apply, including the presence of double taxation agreements and the fact that your company is permanently based in Singapore.

Withholding tax is imposed on non-Singapore residents who hire non-Singapore companies to install equipment, provide technical support, provide training and advisory services, or undertake other related activities in Singapore. Keep in mind that withholding tax does not apply to services provided remotely.

Singapore withholding tax applies to the rental of movable property and any payments made to the non-resident company for such property.

Examples of NRPs include the ones listed below:

In order to meet Singapore’s need for technical expertise, foreign experts and specialists are brought in by the government, statutory bodies, and commercial organizations.