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 15^th 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 15^th 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

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