A person who makes payment of a specified nature (e.g. royalty, interest, management fees, service fees, technical fees, etc.) to a non-resident company or individual is required to withhold a percentage of that payment and have to pay a Withholding Tax to IRAS.
Withholding Tax
A person must withhold tax when certain types of payments are made to non-resident persons. The rate of withholding tax depends on the nature of payment.
Example of nature of income as follows:-
- Interest, commission, fee or other payment in connection with any loan or indebtedness
- Royalty or other lump sum payments for the use of movable properties.
- Payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information.
- Rent or other payments for the use of movable properties.
- Technical assistance and service fees
- Management fees
- Payment to non-resident professional/foreign firms (unincorporated).
- Payment to non-resident public entertainer
- Payment to non-resident Director
- Commission/payment to non-resident international market agent
- Time, voyage and bareboat charter fees for the charter of ships.
- Proceeds from the sale of any real property by a non-resident property trader.
- Distribution of taxable income made by REIT to unitholder who is a non-resident (other than an individual)
Pricing
From 1 July 2016, the withholding tax form can only be filed electronically through IRAS website. The payer must be e-file and pay the withholding tax to IRAS by the 15th of the second month from the payment of payment to the non-resident.
