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A Quick Guide to Withholding Tax for Singapore Companies and Individuals

What is Withholding Tax

Withholding tax is levied on payments made to non-residents including employees, business partners and overseas agents.

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.

In the event that you make payments of a specified nature to a non-resident, you must withhold a certain percentage of that payment known as Withholding Tax.

The types of payments that are subject to withholding tax are as follows:

1. Any payment listed under §45 of the Singapore Income Tax Act.
2. 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

You must pay the withholding tax by the 15th of the month following the date of payment.

Withholding Tax Amount

The amount of withholding tax you have to pay depends on the type of payment you make and to whom you pay.

For management, technical and other service fees paid to a non-resident company, the withholding tax rate is the same as corporate tax rate, which is 17% for 2010.

For payments made to non-resident individuals, tax is to be withheld at 20% of the gross payment.

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%.

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

Singapore Tax Information by Rikvin Pte Ltd

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