Introduction to Singapore Withholding Tax

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.