By MoneyBees
Work out withholding tax on payments to non-residents: IRAS rates by payment type or a treaty rate, gross-up when you bear the tax, the due date and late penalties.
When a Singapore business pays a non-resident for certain things, such as interest, royalties, services done in Singapore or director's fees, it must hold back part of the payment and pay it to IRAS. The payer files the return and pays the tax.
Interest on loans 15%, royalties 10%, rent of movable property 15%, technical and management fees to a company 17%, director's fees 24%, services by a non-resident individual 24%, professionals 15% of gross or 24% of net, and public entertainers 15%.
By the 15th of the second month after the date of payment. For a payment dated 3 October, you file and pay by 15 December. The date of payment is the earliest of the contractual due date or invoice date, the date credited and the date paid.
IRAS charges a 5% penalty. If the tax is still unpaid 30 days after the due date, it adds 1% for every completed month, up to 15% more. On S$7,000 due on 15 July and paid on 25 October, the penalty is S$490.
Then the agreed fee is treated as net and IRAS grosses it up. Divide the fee by 1 minus the rate: a S$7,500 fee at 15% becomes S$8,823.53, and the tax is S$1,323.53, which you pay on top.
Yes, if Singapore has a tax treaty with the payee's country and it sets a lower rate. File and pay at the reduced rate, then give IRAS the payee's certificate of residence. You still file if the treaty rate is 0%.
Service fees are subject to withholding tax when the work is done in Singapore. Services performed wholly outside Singapore are not, but keep records that show where the work was done.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).