Withholding Tax liability In Singapore
A payer must withhold tax when certain types of payments (e.g. interest, royalty, services etc) are made to non-resident companies.
When to File and Pay Withholding Tax?
The e-filing of withholding tax and payment are due on 15th of the second month from the date of payment to the non-resident.
If you are on GIRO for withholding tax payment, the GIRO deduction is on the 25th of the same month after the payment due date. However, if the GIRO deduction date falls on a holiday, the deduction will be on the next working day.
You may refer to your acknowledgement page for payment details after you have e-filed.
Late penalty fees will be imposed when payment is not received by the due date.
Payment
The date of payment is defined as the earliest of the following dates:
1. When the payment is due and payable based on the agreement or contract, or the date of the invoice in the absence of any agreement or contract (credit terms should not be taken into consideration).
2. When payment is credited to the account of the Non-Resident or any other account(s) designated by the Non-Resident
3. The date of actual payment
4. Director’s Fees : The date of payment for director’s fees is the earliest of the payment date or the date the payment was voted and approved (Example: at the Company’s Annual General Meeting).
To avoid late payment penalties, please e-file the withholding tax and ensure the payment is received by IRAS before the due date.
Withholding Tax Rates
1. Interest, commission, fee or other payment in connection with any loan or indebtedness : 15%
2. Royalty or other lump sum payments for the use of moveable properties : 10%
3. Payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information : 10%
4. Rent or other payments for the use of moveable properties : 15%
5. Technical assistance and service fees : Prevailing Corporate Tax rate
6. Management fees : Prevailing Corporate Tax rate
7. Time, voyage and bareboat charter fees for the charter of ships : NIL
8. Proceeds from sale of any real property by a non-resident property trader : 15%
9. Distribution of taxable income made by REIT to unitholder who is a non-resident (other than an individual) : 10%
Refund Under S46 Of Income Tax Act For Payments Withheld At Corporate Tax Rate
If withholding tax is imposed at the prevailing corporate tax rate on the gross payment, the tax is not the final tax. If the non-resident company wishes to claim for the expenses incurred in deriving the income, it may forward the certified accounts and tax computation for IRAS’ examination.
Please include the following information with your tax computation:
* Full name of payer
* Tax reference number of the payer
* Nature of payment
* Date of payment to non-resident
* Period the payment covers
* Gross amount of payment
* Amount of tax deducted and accounted to IRAS
When the net income and tax have been determined, any tax withheld in excess of the tax on the net income will be refunded.
If the company is a resident of a tax treaty jurisdiction, the Avoidance of Double Taxation Agreement (DTA) may provide for relief from double taxation, depending on the provisions of the DTA.
Penalty for late payment imposed by IRAS
Penalty 5%
If the withholding tax payment is not submitted and paid by the due date, a Demand Note will be issued to inform you of the 5% penalty.
You are advised to pay the withholding tax and penalty by the due date stated in the demand note. If not, enforcements action(s) will be taken to recover the tax and penalties.
Example : Payment Due & Payable to Non-Resident
Payer X made royalty payment of $10,000 (Gross) to Non-resident A on 02 Aug 2016. The filing and payment due date is 15 Oct 2016 but the withholding tax payment of $1,000 was paid to IRAS on 20 Oct 2016. A 5% penalty of $50 will be imposed.
Penalty 1%
If IRAS did not receive the withholding tax payment within 30 days from the due date, an additional penalty of 1% will be imposed on the withholding tax for each completed month (subject to maximum of 15 months i.e. 15 %) that the tax remains outstanding.
Hope the above clarifies and helps you to quickly rectify your case if you have not so before IRAS catches up with you. It’s just a matter of time IRAS would.
If you need help, feel free to contact us at :
(O) +65 63851011
(M) +65 90880669
