SINGAPORE WITHHOLDING TAX

Making Cross-border Payments

Under the Singapore income tax law, companies subject to tax in Singapore making certain payments such interest payments, professional and royalties fees to non-resident persons are required to withhold tax and remit the tax withheld to the Singapore Tax Authority within a stipulated period of time. Conversely, receipts of income by companies in Singapore from outside Singapore may also be subject to withholding tax in other tax jurisdictions. Payments typically subject to withholding tax in other tax jurisdictions are interest, royalty and dividend.

Singapore Withholding Tax Rates

Nature of Income Interest, commission, fee or other payment in connection with any loan or indebtedness Royalty or other lump sum payments for the use of movable properties Payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information Rent or other payments for the use of movable properties Technical assistance and service fees Management fees Proceeds from sale of any real property by a non-resident property trader
1

Tax rate 15% 1 10% 1 2 10% 1 2 15% 1 Prevailing Corporate Tax rate 3 Prevailing Corporate Tax rate 3 15%

These withholding tax rates apply when the income is not derived by the non-resident person through its operations carried out in Singapore. They are to be applied on the gross payment and the resultant tax payable is a final tax. For operations carried out in Singapore, the tax rates applicable on the gross payment are as follows: - Non-resident person (other than individuals) : Prevailing corporate tax rate - 17% - Non-resident individuals : 20%
2

The reduced withholding tax rate of 10% applies to payments due and payable on or after 01 Jan 2005.

If the year in which the services were rendered is different from the year of payment, the withholding tax is to be based on the prevailing corporate tax rate for the year where the services were rendered. For example, if the service was rendered in Dec 2008 and the payment was made in year 2009, the prevailing corporate tax is that for year 2008 (Year of Assessment 2009), which is 18%. For payments made to non-resident individuals, tax is to be withheld at 20% on the gross payment.

Non-Resident Directors and Professionals

Certain payments made to non-resident directors and professionals may be subject to Singapore withholding tax (eg. remunerations and fees). The Singapore payer is required to: Withhold tax on payment to the non-resident individual; File Withholding Tax Form; and Pay the withholding tax by the 15th of the following month from the date of payment

Tax Treaty Benefit / Certificate of Residence

Where an Avoidance of Double Taxation Agreement (DTA) is applicable, the rates specified in the DTA of the respective countries would apply. If you are applying the rates in the DTA, you would need a Certificate of Residence from the non-resident payee to prove that it is a tax resident of the treaty country. Please submit a Certificate of Residence from NonResidents (Claim for relief from Singapore Income Tax under Avoidance of Double Taxation Agreement) that is duly certified by the tax authority of the country of residence, to the Singapore Tax Authority.

Exemption From Withholding Tax

Certain payments made to non-residents are exempt from Singapore withholding tax. These payments include (but not limited to): Certain software payments Payments for the use of or the right to use information and digitised goods by endusers Payments for satellite capacity Payments for the use of international submarine cable capacity, including payments for Indefeasible Rights of Use (IRUs)

Help and Advice

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