Withholding Tax - 49th Run

Withholding tax, a tax on payments made to non-residents including employees, business partners and overseas agents, is an area often overlooked by businesses. Gain an understanding of withholding tax and how it affects your business in the introductory Withholding Tax workshop that will shed light on the types of payments that are subject to withholding tax as well as the compliance requirements.

Key Topics

Overview of withholding tax system

Who are non-resident companies and individuals (with COVID-19 updates)

Transactions that are subject to withholding tax

• Applicable sections in Singapore Income Tax Act – treatments of payments of interest, royalties, service fees, etc.
• Payment to non-resident professionals
• Rights-based approach for characterising software payments and payments for the use of or the right to use information and digitised goods

Exemptions and remissions

Withholding tax rate

• Singapore Income Tax Act

Application of tax treaties

• Concept of Permanent Establishment (“PE”)
• Types of PE
• PE and implication to withholding tax
• Various articles in a tax treaty (e.g. business profits, royalties and interest articles, etc.)
• Claiming exemptions or reduced rates under the tax treaties
• Certificates of residence

Withholding tax compliance and administration

• Timing of withholding and payment to IRAS
• Calculation
• Who bears the withholding tax
• When payment is in foreign currency
• Deductibility of withholding tax on interest borne by companies on behalf of non-residents
• Withholding tax forms
• Penalties for non-compliance
• Voluntary disclosure
• Tax clauses in agreements – tax gross up and tax indemnity clause

Foreign tax credit/Pooling

Case studies on application of withholding tax provisions