Withholding tax in Singapore (WHT) is the tax that is withheld and paid to IRAS whenever a non-resident company or individual receives revenue for services rendered or work completed in Singapore. To learn more about how to claim withholding tax in Singapore, read this guide explaining the withholding tax laws in Singapore for both businesses and individuals.
How does withholding tax work in Singapore?
Withholding tax is the portion of a payment that must be withheld and paid to IRAS when a Singapore business or individual makes a payment to a non-resident for services rendered in Singapore. In knowing how to claim withholding tax in Singapore, you should know that the non-resident is responsible for paying the withholding tax in most cases.
Who are considered non-resident companies and individuals in Singapore?
To learn more about how to claim withholding tax in Singapore, it’s important to know the distinctions between non-resident companies and individuals that IRAS considers.
Non-resident Companies
For tax purposes, IRAS considers the following as non-resident companies:
Businesses with operations in Singapore but were incorporated elsewhere
Singapore-incorporated businesses that are run or controlled from somewhere else
Branches of international firms in Singapore
Non-Resident Individuals
Non-residents are people who spend fewer than 183 days in Singapore each year.
Non-Resident Professionals
A professional is a person who, while acting under a service agreement, is engaged in any profession (i.e., someone who is not an employee).
Non-Resident Public Entertainers
In Singapore, a public entertainer can pursue a career, vocation, or occupation. Athletes, musicians, and performers on stages, radio, and television are all considered public entertainers.
Non-Resident Director
For tax reasons, IRAS considers a member of the board of directors of a firm as a director.
What payments are subject to withholding tax in Singapore?
To know how to claim withholding tax in Singapore, you should know the different types of payments that are subject to withholding tax. Withholding tax will only be applied to certain payments made to non-resident companies under the purview of Singapore regulations.
These consist of the following:
Commissions, interests, and any other expenses associated with debt or loans
Royalty, rights of use, and intellectual property
Management fees
Services rendered
Rent or other payments for the use of any movable property
What types of payments are not subject to withholding tax in Singapore?
It’s also important to be familiar with the different types of payments that are NOT subject to withholding tax in case you need to determine how to claim withholding tax in Singapore. That said, the following payments are exempt from withholding tax when given to a non-resident person or business:
Dividends
Payments made to non-resident firms' Singapore branches
Payments from a bank, credit company, and other permitted businesses
Payments for ship charters
When should I pay the withholding tax in Singapore?
Businesses must file and pay withholding tax on the 15th of the second month after making a payment to a non-resident. For instance, if the company made the payment on January 18, the payment for the withholding tax would be due on March 15.
How do I know the exact date of payment for the withholding tax?
You can determine the exact date of payment by using the earliest of the following:
Contract's date
The date on the invoice, if there is no contract.
The date that the revenue was credited to the non-resident's account
Date of actual payment
What happens if I don't pay the withholding tax within the deadline?
If you do not pay the withholding tax within the deadline, IRAS will send you a Statement of Account along with 5% penalty charges.
It is also important that you pay the tax and penalty within the deadline specified in the Statement of Account to avoid an extra penalty of 1% for each month that the tax and penalty are past due (up to a maximum of 15%). These cautions are crucial when figuring out how to claim withholding tax in Singapore.
Need help with professional corporate taxation services?
The withholding tax regulations in Singapore can be tricky, especially if you don't have anyone to help you with all the paperwork. If you're looking for a company taxation service provider, SJH Advisory offers a wide range of corporate taxation services.
Contact SJH Advisory today to get help on how to file withholding tax in Singapore and learn more about their corporate service offerings.
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