When a person makes payments of the following nature to a non-resident company, he has to withhold tax. The amount of tax withhold (i.e. withholding tax rate) is dependent on the nature of payment.
Nature of payment which attracts withholding tax include:
- Interest, commission, fee in connection with any loan or indebtedness
- Royalty or other payments for the use of or the right to use any movable property
- Payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information or for the rendering of assistance or service in connection with the application or use of such knowledge or information Management fees
- Rent or other payments for the use of any movable property
- Payment for the purchase of real property from a non-resident property trader
- Director fees paid to a non-resident director
Rate of withholding tax
Varies from 10% to 15% depending on the nature of payment and also whether the there is a Double Taxation Agreement concluded between Singapore and country in which the recipient of such payment is currently residing. For director fees, the withholding tax rate is 18% (Y/A 2008).
Penalty for non-compliance
Maximum is 20% of the withholding tax outstanding for each Year of Assessment.
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