Living in Singapore as a foreigner? You may not know it, but many payments that you receive, whether they are made to you as an individual or to your non-resident company, may be eligible for Withholding tax. In this article, we will clarify the applicable rates, eligible payment criteria, and your obligations related to withholding tax in Singapore.
What is withholding tax in Singapore?
How does withholding tax work in Singapore?
Per local tax law, withholding tax in Singapore is used to collect taxes on most types of income earned by non-resident individuals or companies. The tax applies to any payments received from sources within Singapore. Typically, it is deducted at the source by the payer before making the transaction towards a non-resident.
Payments Covered Under Singapore’s Withholding Tax regulations
Singapore’s withholding tax rate is determined by the type of payment and the residency status of the recipient. When specific payments are made to non-residents, the payer is required to withhold the applicable tax and remit it to the Inland Revenue Authority of Singapore (IRAS).
Payments that are subject to withholding tax include:
- Services
- Interest
- Royalties
- Movable property rentals
- Direct payments to non-residents
The applicable rate may also be influenced if there exists a double taxation agreement (DTA) between Singapore and your country of residence. It is important to note that withholding tax does not apply to payments made to resident individuals or corporations.
Withholding Tax Rates in Singapore
Given that withholding tax rates in Singapore are determined by the type of income being paid, they can vary significantly. For instance, dividends are generally subject to a withholding tax rate of 0%, whereas other types of payments follow a variable tax rate system:
| Payment Type | Tax Rate (%) |
| Interest, commission, and other fees related to loans and debt | 15% |
| Royalties and rights to use intellectual property (IP) | 10% |
| Royalties and other payments made to an author, composer, or choreographer | 24% on net royalties |
| Payments for the use or the right to use scientific, industrial, commercial, and technical knowledge or information | 10% |
| Rent and other payments for using movable property | 15% |
| Sales proceeds from any real property by a non-resident property trader | 15% |
| Distribution of taxable income made by a Real Estate Investment Trust (REIT) to a unit holder who is a non-resident non-individual | 10% |
| Payment to a non-resident director | 24% |
| Payment to a non-resident professional or foreign firms (unincorporated) | 15% on gross income or prevailing non-resident individual rate on net income |
Key Considerations when Calculating Withholding Tax
How to Qualify for Withholding Tax Exemptions in Singapore
Some payments may be eligible for exemption from withholding tax under particular conditions or criteria. These considerations include:
- Double Taxation Agreements (DTAs): Exemptions or reduced withholding tax rates may apply if a DTA exists between Singapore and the recipient’s country of residence. The DTA outlines which income types qualify for these benefits.
- Foreign-Sourced Dividends: Foreign dividends received by resident individuals are also exempt from tax, provided they meet certain criteria outlined in the Income Tax Act. However, foreign dividends received through a partnership in Singapore may be subject to different rules
- Payments to Singapore Branches of Non-Resident Companies: Under Sections 12(6) and 12(7) of the Income Tax Act 1947, withholding tax is waived for payments such as interest, commission, royalties, or management fees made to Singapore branches of non-resident companies.
To apply for withholding tax exemptions, it is necessary to submit a self-declaration form to demonstrate to the IRAS that the qualifying conditions have been met. Emerhub’s local experts can also handle this on your behalf to ensure that you comply with specific exemption requirements.
Withholding Tax Deadlines and Penalties in Singapore
You are required to file for withheld tax to the Inland Revenue Authority of Singapore (IRAS) by the 15th of the second month following the date of payment. The relevant payment date is determined by the earliest of the following:
- The date specified in the contract
- The invoice date
- The actual payment date
- When the recipient is credited
Failure to meet the filing and payment deadline will result in a late payment penalty of 5%. Additional penalties may apply if the payment is not made within 30 days of receiving the penalty notice.
To streamline the filing process, Emerhub’s team of local experts can help you understand the applicable tax rates and file the necessary forms. Our tax and accounting services can also identify potential exemptions to help reduce your tax liabilities.
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Frequently asked questions
Resident individuals are taxed on a progressive scale from 0% to 24%, based on their income bracket. Non-residents are taxed at a flat rate of 24% for most income types, except employment income which is taxed at 15% or the resident rate, whichever is higher.
Corporate income tax is levied at a flat rate of 17%. Singapore uses a single-tier system, meaning companies pay tax only on chargeable income, and dividends distributed to shareholders are exempt from further taxation
Personal income tax returns must be filed if your company’s annual income exceeds SGD 20,000. Your corporate tax returns must be submitted to the IRAS by November 30 each year
