Withholding Tax in Singapore: Filing IRAS form IR37, applicability and deadline
May 10, 2024
Withholding tax in Singapore is a tax deducted at source from payments made to non-residents, including companies and individuals, for services rendered or work done in Singapore. It ensures that tax is collected on the income generated in Singapore by non-residents.
Who needs to pay withholding tax?
Singaporean Companies and Individuals: Required to withhold a portion of payments made to non-residents for services provided in Singapore.
Non-resident Companies and Individuals: Subject to withholding tax on income earned from Singaporean sources.
What are the key components of withholding tax?
Types of payments subject to withholding tax include interest, royalties, management fees, and fees for technical or other services.
Withholding tax rates vary depending on the type of payment and the tax treaties between Singapore and the non-resident country. Typical rates range from 10% to 17%.
Singapore has double taxation agreements (DTAs) with many countries, which may provide for reduced withholding tax rates.
What are the filing deadlines?
Withholding tax must be filed and paid by the payer within 15 days from the end of the month in which the payment to the non-resident was made.
What is the filing process?
Step 1: Identify Payments Subject to Withholding Tax
Determine if the payment to a non-resident falls under the categories requiring withholding tax.
Step 2: Calculate the Withholding Tax
Apply the appropriate tax rate based on the nature of the payment and any applicable tax treaty.
Step 3: File Withholding Tax
Complete the IRAS Form IR37. This can be done electronically via the IRAS myTax Portal.
Step 4: Make Payment
Pay the calculated withholding tax amount through the IRAS myTax Portal or other approved payment methods.
What are the legal and financial implications of non-compliance?
Failure to withhold or remit withholding tax can result in penalties, interest charges, and legal actions. Non-compliance can also impact the reputation of the business and its relationships with international partners.
Frequently Asked Questions
What should I do if I fail to withhold tax from a payment made to a non-resident?
You should immediately notify IRAS and pay the outstanding tax amount. Penalties and interest may still apply, but proactive engagement can help manage the implications.
How can I determine if a Double Taxation Agreement (DTA) affects the withholding tax rate?
Review the specific DTA between Singapore and the non-resident’s country to determine if a reduced rate or exemption applies. Information on DTAs is available on the IRAS website or can be discussed with a tax advisor.
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