Category Archives: Withholding Tax

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.

Income Tax – Singapore Withholding Tax On Payment to Non-Resident Companies


Recently, one of our clients made an inquiry on his Singapore withholding tax obligations on payments made to a foreign company (F Co) in respect of business coaching services and training run by F Co in Singapore. More specifically, F Co does not have any legal presence in Singapore and it will ask its business coaches to physically provide business coaching services in Singapore to its customer. The relevant tax question is whether the Singapore customer is required to comply with the Singapore withholding tax provisions on the payment for business coaching to F Co.

Under Singapore tax law, where a payment is made to a non-resident company for training, consultancy or other services, Singapore withholding tax is applicable on the gross service fees attributable to work done in Singapore. The amount of tax to be withheld is based on the prevailing corporate tax rate (17%) on the gross service fees.

In the above case, where it is determined that the business coaching services are rendered by F Co in Singapore, the Singapore customer is liable to deduct withholding tax at 17% on the gross service fee. Otherwise, the Singapore customer would be liable to a penalty imposed by IRAS in respect of non-compliance with the Singapore withholding tax provision.

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

Singapore withholding tax – payment for web-hosting services provided by a non-resident company


On 2 July 2014, IRAS has updated the content of withholding tax’s FAQ (For payments made to non-resident companies).

IRAS takes the position that Singapore withholding tax is applicable if the payment for web-hosting services is made to a non-resident company for the work done in Singapore.  The payer is required to withhold tax at the rate of 17% (prevailing corporate tax rate).

Where there is a payment for rental of equipment such as the leasing of a server, it is also subject to a final withholding tax at 15% or at a reduced rate as specified in the relevant Double Taxation Agreement.

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

Singapore withholding tax – guarantee fee paid by Singapore sub to its overseas parent


On 2 July 2014, IRAS has updated the content of withholding tax’s FAQ (For payments made to non-resident companies).

IRAS takes the position that  withholding tax is applicable on guarantee fee paid by a Singapore payer to a non-resident company.  However, guarantee fees paid by a Singapore sub to its overseas parent who act as the guarantor will not be deemed to be sourced in Singapore, and hence withholding tax will not be applicable, provided that the overseas parent

  • does not, by itself or in association with others, carry on a business in Singapore or has a permanent establishment in Singapore; or
  • carries on a business by itself, or in association with others, in Singapore or has a permanent establishment in Singapore, but the giving of the guarantee is not effectively connected with the business carried on in Singapore or with that permanent establishment.

The non-applicability of Singapore withholding tax is also subject to the conditions that the transactions are conducted at arm’s length and not with intent of siphoning off Singapore income.

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

Singapore withholding tax – reimbursement on accommodation, meals and transportation expenses


On 29 May 2014, IRAS has updated the content of withholding tax’s FAQ (For payments made to non-resident companies).

IRAS takes the position that reimbursement of accommodation, meals and transportation expenses to a non-resident company is subject to withholding unless the Singapore payer can obtain a detailed breakdown of the expenses showing that such expenses were reimbursed at the actual costs without any profit element (or mark-up).

IRAS further clarifies that the payer does not need to submit the breakdown or any documents to IRAS but has to retain them and submit to IRAS upon request.

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