If a payment is made to a copyright owner for the transfer of partial copyright rights (e.g. B copyright licence to be commercially exploited by the payer), the payment is a royalty. These payments to non-residents are subject to a withholding tax of 10% or the reduced rate provided for by a double taxation agreement (DTA). Is a payment to a non-resident supplier subject to withholding tax for the adaptation of software? If the cost of the equipment is included in the payment to the non-resident seller, is the portion attributable to the equipment subject to withholding tax? A Singaporean company has engaged a consulting firm in a jurisdiction with which Singapore does not have a full DTA (e.B. Hong Kong or the United States). What is the impact of withholding tax on the company`s payments in Singapore? If the company in Singapore bears the tax for the company in Hong Kong or the United States, what tax implications does this have? Is payment for web hosting services provided by a non-resident company subject to withholding tax? Singapore has entered into double taxation treaties (DTAs) with many countries to prevent companies and individuals from being taxed by both jurisdictions. If your company operates outside a country that has a tax treaty with Singapore, the DTA may grant relief from double taxation. Note that this depends on the particular service offered by your company, as well as the specific provisions of the DTA in your country. For more information, see our guide to double taxation treaties in Singapore. A non-resident employee is a foreign person who has worked for an employer in Singapore for less than 183 days. Under Singapore`s tax law, all funds owed to a non-resident employee are subject to withholding tax. Singapore`s low tax rates, along with other advantages such as its efficient business environment, independent legal system and well-trained workforce, make it a strategic location for foreign investors to establish their operations in Southeast Asia. Foreign investors operating in several jurisdictions in the ASEAN region should therefore take into account Singapore`s advantageous withholding tax policy when structuring their business operations.
Rents or other payments to non-residents for the use of movable property are subject to withholding tax under paragraph (d) of paragraph 12(7) of the Income Tax Act. Distributions of REITs to shareholders who are non-natural non-residents are subject to a 10% withholding tax or the applicable corporate tax rate. A non-resident company is not considered an independent company or in relation to other companies operating in Singapore if it only has affiliates/subsidiaries operating in Singapore as they are separate legal entities. Since payments for cloud computing are considered payments for services, a withholding tax applies when such payments are made to non-residents for services provided in Singapore. If the non-resident service provider is located in a jurisdiction of the DTA, the provisions of the DTA apply. Withholding tax is applicable if payment for web hosting services is made to a non-resident company to work in Singapore. The payer is required to pay the 17% tax (i.e. the applicable corporate tax rate). A Malaysia-based company that provides technical services in Singapore is subject to a withholding tax rate of 5 per cent on gross charges for services provided in Singapore, as provided for in the Commission`s article on technical services. The 5% rate only applies if the Malaysian company does not have a permanent establishment in Singapore. IRAS applies the applicable corporate tax rate (CIT) for technical assistance, service fees and administrative fees, and Singapore`s CIT rate is currently 17%.
1These WHT rates apply if the income is earned by the non-resident through transactions outside Singapore. They are applied to the gross payment. The resulting tax payable is a final tax. The following tax rates apply to gross payments when transactions are made in Singapore: If the services of the U.S. consulting firm are provided in Singapore, the fee is subject to withholding tax. If, on the other hand, the services are provided in whole or in part outside Singapore, only the payment attributable to the services provided in Singapore is subject to withholding tax. For DTAs that contain a separate article on technical services (e.g. B, the Singapore-Malaysia DTA), the tax to be withheld depends on the tax rate specified in this article. However, if the non-resident company has a permanent establishment in Singapore, the provisions of the commercial profits article apply instead. Singapore withholding tax (known as withholding tax in other countries) refers to the tax that is withheld and paid to the Inland Revenue Authority of Singapore (IRAS) when a non-resident company or non-resident derives income from a Singaporean source for services or work provided in Singapore.
IRAS is the tax authority of Singapore. Software payments are considered royalties for withholding tax purposes, with the exception of payments for shrink film software, site licenses, downloadable end-user software, and software bundled with computer hardware. Such an exception only applies if buyer does not obtain any commercial rights in its copyright, reproduces, reverse engineers, decompiles or modifies the Software. Professional services provided by a non-resident person are not covered by the article on business profits, but fall under the article on independent personal services. .