Income Tax – Penalty for Non-Compliance with the Singapore Withholding Tax Provision


With reference to our previous blog post, one of our clients made an inquiry on one incident he experienced.

  • He attended a 2-day Marketing & Branding Workshop and the trainers are all foreigners.  At the end of the workshop, the trainers made an offer for a 4-day group business coaching which would be conducted in Singapore.   Upon making the payment via credit card, he noticed that the invoice was issued by a US company.
  • He also attended a 1-day workshop which is conducted by the same trainers.  At the end of the workshop, the trainers made an offer for a hands-on coaching on speakers’ training and in doing this, one of the trainers would come to Singapore to provide the hands-on coaching directly with the Singapore customers.

Our client asked what if he is not aware of the Singapore withholding tax provision, what he should do?  Is there anything IRAS could do to enforce this foreign company to be liable to Singapore income tax on the coaching service fee derived from Singapore instead of penalizing the persons who made the payment.

Withholding tax penalty

  • For Singapore withholding tax purposes, if the withholding tax payment is not submitted and paid by the due filing and payment due date, a 5% late payment penalty will be imposed on the outstanding tax and a Demand Note will be issued to Payer to inform of the imposition of penalty.  The Payer will be given a due date to pay the outstanding tax and 5% penalty.  If the outstanding amount is not paid within 30 days from the due date, an additional penalty of 1% will be imposed on the withholding tax for each completed month (subject to a maximum of 15 months i.e. 15 %) that the tax remains outstanding.
  • The obligation to comply with withholding tax provision is not on the foreign company in this case but the payer because the IRAS cannot enforce the administration and collection of withholding tax on the foreign company.
  • Thus, it is advisable to make a voluntary disclosure to IRAS relating to the payments made to the non-resident company in respect of any business coaching and consulting services rendered in Singapore assuming that the payer hasn’t received any queries from IRAS.

Voluntary Disclosure Programme (“VDP”)

  • Where the voluntary disclosure is made within one year from the statutory filing due date(s), the late payment penalties will be fully waived when the VDP application is approved. For disclosure made after the one-year grace period, the late payment penalties will be reduced to 5%.

If you have any questions regarding the above, please contact support@whm-consulting.com.

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