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Withholding Taxes in Singapore

Withholding Taxes in Singapore

Singapore has a favorable taxation system which applies progressively to individuals and a flat rate to companies in the city-state. Foreign companies will be taxed on the income generated in Singapore only, which can lead to higher rates. This is why foreign investors usually choose to open a Singapore company rather than operate through companies established in their home countries. For company registration services in Singapore you can rely on our agents.

Those above are the main taxes imposed in Singapore, however the Inland Revenue Authority (IRAS) also levies what are called withholding taxes. In other countries withholding taxes are known as taxes made on certain payments to non-residents, or even deductions at source.

Our experts in opening companies in Singapore can offer more information on the taxation system applicable in the city-state.

What are the withholding taxes imposed in Singapore?

In order to be applied, the withholding taxes in Singapore must first be determined. As mentioned above, an withholding tax is related to a payment made to foreign companies by local ones. The types of payments attracting a withholding tax in Singapore are:

  • – interests, royalties, commissions, fees related to loans;
  • – payments related to the use of movable property;
  • – payments used to the use of intellectual property;
  • – management fees;
  • – payments related to the purchase of real estate;
  • – rental payments;
  • – payments related to distributions from real estate investment trusts (REITs);
  • – payments related to structured payments.

Section 12 in the Income Tax provides a definition for structured products on which a Singapore company must pay withholding taxes.

You can request our accounting services for the computation of withholding taxes in the city-state. Our local agents can also assist with the company formation procedure in Singapore.

What are the rates of withholding taxes in Singapore?

The following rates apply when paying withholding taxes in Singapore:

  • – a 15% rate on interest, commission or fee;
  • – a 10% rate on royalties payments derived from the use of movable property and intellectual property;
  • – a 15% rate on rental income;
  • – a 15% rate on income arising from selling real estate;
  • – a 10% rate on the distribution of income from REITs.

In order to avoid the payment of withholding taxes twice, Singapore has signed numerous double taxation agreements.

You can contact our company formation consultants in Singapore who can offer more information on the payment of withholding taxes in the Republic.