Series on Singapore tax laws – Part 5

Difference between resident and non-resident companies

Particulars Resident Non-resident
Tax rates Prevailing corporate tax rates Prevailing corporate tax rates or reduced withholding tax rates or tax treaty rates
Foreign tax credit Can be claimed Cannot be claimed
Tax exempt dividends Yes Not applicable
Exemption of foreign income Yes No
Certain Singapore exempt income Not exempt Exempt in certain situations

Withholding taxes

Withholding are done at corporate tax rates or at reduced rates of 10% to 15%, depending on the nature of payments. Further, lower withholding taxes may be applicable, if tax treaty provides for such lower rates. Overview of the applicable tax withholding rates –

Nature of payment Applicable withholding tax rates  
Interest, commission, fee or any other payment in connection with any loan or indebtedness 15%
Management fees 17*%
Rental of movable property 15%
Commission income of licensed international market agent 3%

(*For payments to non-resident individuals, tax is to be withheld at 22% of the gross amount)

Deadline for payment of withholding taxes

  • These are to be deposited with the tax authorities by 15th of the second month following the date of payment
  • Withholding tax form needs to be e-filed
  • If taxes are withheld but no notice is given to the tax authorities by 15th of the second month following the month in which payment or deemed payment is made, a penalty of three times of the amount of tax payable can be imposed together with a minimum fine of $10,000 or maximum jail of three years

The date of payments is earlier of the following dates

  • Date when payment is due and payable based on agreement/ contract. The date of invoice shall be deemed date of payment in the absence of contract/ agreement
  • Date when payment is credited to the account of the non-resident person
  • Date of actual payment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s