Corporate Taxation
A corporation is generally liable for Singapore income tax on all income accruing in, or derived from Singapore, as well as foreign sourced income remitted or deemed remitted into the country.
Withholding Taxes
In the case of non-resident recipients, tax may be collected by deduction at source.
Every entity is required to withhold tax before paying or crediting certain categories of income to any non-resident recipient. The rates of withholding tax for the most common elements are:
Nature | Tax Rate |
Interest, commission, fee in connection with any loan or indebtedness | 15% |
Royalties or other payments for the use of or the right to use any movable property | 10% |
Director’s fees and remuneration | 20% |
Management fees | 17% |
Technical assistance and service fees | 17% |
Rent or other payments for the use of any movable property | 15% |
For illustration purposes, let’s assume that interest expenses amounting to $100,000 are due and payable by a Singapore incorporated company to a US incorporated company. On the date of the due payment, the Singapore company has to withhold and remit to the IRAS the amount of $15,000 together with a prescribed form. The balance of $85,000 can be remitted to the US incorporated company.
The above withholding tax rates may be mitigated where Singapore has a double tax treaty with the country of the recipient.
To reduce compliance costs for businesses, payers no longer need to withhold tax on sections 12 (6) and 12 (7) payments (e.g. interest and royalty payments) made to Singapore branches of non-resident companies. This change took effect for all payment obligations that arose on or after 21 February 2014.
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Tax
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