Withholding tax, often shortened to WHT, is really about the government collecting tax at the point of payment rather than waiting until the end of the year. In Singapore’s context, it applies whenever certain payments are made to non-residents. It also covers withdrawals from the Supplementary Retirement Scheme (SRS) accounts by foreigners or Singapore permanent residents.
The principle is fairly simple: when money leaves Singapore in the form of fees, interest, royalties, or other such payments to a non-resident, the payer must deduct tax at the source and hand it over to the Inland Revenue Authority of Singapore (IRAS). That deduction — the WHT — is effectively the non-resident’s income tax contribution on what they’ve earned from Singapore.
So, what falls into this net? The scope is quite broad:
- Payments for services, interest, royalties, technical fees, or even rentals of movable property when paid to a non-resident.
- Distributions of taxable income by Real Estate Investment Trusts (REITs) to non-resident, non-individual unit holders.
- Withdrawals from SRS accounts by foreigners or PRs.
- Payments to non-resident directors, professionals, public entertainers, and international marketing agents.
A key detail is the definition of a “non-resident.” For Singapore tax purposes, that is any individual who does not qualify as a tax resident. Determining residency is a separate exercise, but once a person or entity is considered non-resident, these withholding rules kick in.
WHT Filing Requirements
Filing for WHT is not just about paying tax — it is also about deadlines and proper reporting. IRAS expects both the payment and return filing to be completed by the 15th of the second month after the payment date.
To give an example: if a payment to a non-resident was made on 26 September 2021, then the due date for filing and payment is 15 November 2021. If the taxpayer is paying through GIRO (the automated bank deduction system most companies use), then the deduction happens a bit later — usually on the 25th of that same month.
Another case: if the payment was made on 1 October 2021, the due date for filing would be 15 December 2021, and the GIRO deduction would fall on 25 December.
The takeaway here is that the timeline is fixed and short. Missing it creates compliance issues and potential penalties, so businesses need proper systems to capture these deadlines.
Date of Payment
One area that often causes confusion is how to determine the “date of payment.” This date drives the filing deadlines, so getting it wrong can snowball into compliance failures.
The rules set out three possibilities, and whichever comes first is treated as the payment date:
- When the amount becomes due and payable under an agreement or contract (or by invoice if no contract exists).
- When the payment is credited to the non-resident’s account or a designated account.
- The date the payment is actually made.
This “earliest date” approach makes it clear that businesses cannot delay compliance by holding back the physical payment.
Directors’ fees deserve special mention because of how entitlement is determined.
For fees approved in arrears, the key date is when the company’s AGM votes and approves the fees. Even if services were already performed earlier, entitlement only arises once the approval happens. That approval date is therefore treated as the payment date.
For fees approved in advance, the situation is slightly different. Here, entitlement arises only when the director actually renders the services for the accounting year in question. So, even if the approval happens early, payment date is tied to performance of the services.
This distinction matters because the date of payment sets the clock ticking for WHT filing.
Another note — if a non-resident professional or public entertainer receives multiple payments for the same engagement within a 60-day window, then those payments can be consolidated into a single filing. The last payment date is treated as the payment date for filing purposes.
Rate of Withholding Taxes
The rate of WHT depends directly on the nature of the income. Singapore applies different percentages to different streams.
- 15% applies to interest, commissions, fees linked to loans or debts, proceeds from property sales by non-resident traders, and rentals for movable property.
- 10% applies to payments for use of technical or industrial knowledge, distributions from REITs to non-resident non-individuals, and royalties for intellectual property.
- 22% (24% from 1 Jan 2023 onwards) applies to royalties or payments made to authors, composers, or choreographers.
- Technical assistance, management, and service fees are taxed at the prevailing corporate income tax (CIT) rate.
- Charter fees for ships (time, voyage, bareboat) are set at nil.
Additional rates apply depending on the category of non-resident income:
- 22% (24% from 1 Jan 2023) for payments to non-resident directors.
- 15% for payments to non-resident professionals or unincorporated firms (gross basis), unless taxed at the individual’s net basis.
- 15% for payments to non-resident public entertainers.
- 3% for commissions or payments to non-resident international marketing agents.
These rates highlight how Singapore differentiates by activity and role. Directors and creative professionals face higher rates, while international agents face the lowest withholding rate at 3%.
Claiming of Tax Treaty / DTA benefit
Where Singapore has signed a Double Taxation Agreement (DTA) with another country, non-residents may qualify for reduced WHT rates. To claim these treaty benefits, the non-resident must provide a Certificate of Residence (COR) confirming their tax residency in the treaty country.
Deadlines here are strict as well:
- If the claim is for the current calendar year, the COR must be submitted by 31 March of the following year. For example, for taxes withheld in 2021, the COR should be filed by 31 March 2022.
- If the claim relates to earlier years, then the COR must be submitted within three months of filing Form IR37.
Form IR37 itself is required for payments made to non-residents in respect of interest, royalties, and directors’ remuneration.
Treaty claims are only recognised when the paperwork is in order. Without the COR, IRAS will not grant the treaty rate.
Final Thoughts
Withholding tax in Singapore looks straightforward at first glance — a deduction at source, paid over to IRAS. But the closer you look, the more layers emerge. The definition of payment dates, the nuances for directors’ fees, the wide spread of rates depending on income type, and the interaction with treaty benefits all create complexity.
For businesses making cross-border payments, this isn’t just a back-office formality. It has real cash flow implications and real compliance risks. Miss a filing, misjudge a date, or apply the wrong rate, and penalties can follow.
At the same time, Singapore’s system gives clarity — fixed rates, fixed deadlines, and published rules. With preparation, businesses can avoid surprises. And with treaties in place, many non-residents can avoid double taxation if they take the effort to submit certificates on time.
In short, WHT is less about burden and more about discipline. Get the basics right, respect the timelines, and the system works smoothly. Neglect them, and the costs can multiply quickly.
