Filing and Paying Withholding Tax in Singapore

Withholding tax is an essential compliance requirement for businesses in Singapore making payments to non-residents. Failing to meet the deadlines for filing and payment can result in penalties and disrupt business operations. This guide provides a detailed overview of when to file and pay withholding tax in Singapore, ensuring you stay compliant with the Inland Revenue Authority of Singapore (IRAS) regulations.

What is Withholding Tax?

Withholding tax is a tax deducted at source on certain types of payments made to non-residents for services rendered in Singapore. These payments may include royalties, interest, technical service fees, and director’s remuneration, among others. The business making the payment is responsible for filing and paying the withholding tax to IRAS.

When to File and Pay Withholding Tax

Filing and Payment Deadline

• Withholding tax must be filed and paid to IRAS by the 15th of the second month following the date of payment to the non-resident.
• The date of payment is defined as:
• The date when the payment is due and payable, or
• The date when the payment is credited to the non-resident’s account or any other method by which the payment is made available.

Examples of Filing and Payment Deadlines

Steps to File and Pay Withholding Tax

1. Determine the Taxable Payment
   • Identify the payment type (e.g., royalties, interest, service fees) and ensure it falls under the scope of withholding tax.
2. Calculate the Withholding Tax
   • Compute the withholding tax amount based on the applicable rate and payment type.
3. File the Withholding Tax Return
   • File the withholding tax electronically via myTax Portal.
   • Provide the required details, including:
   • Payment type.
   • Non-resident recipient details.
   • Payment amount and date.
   • Applicable withholding tax rate.
4. Pay the Withholding Tax
   • Pay the withholding tax through the available payment modes (e.g., GIRO, internet banking).
5. Receive the Payment Slip
   • After filing and payment, IRAS will issue an acknowledgment slip confirming the transaction.

Penalties for Late Filing and Payment

Failing to file or pay withholding tax by the due date may result in:

1. Late Payment Penalties:
   • A 5% penalty on the unpaid tax amount.
   • Additional penalties of 1% per month (up to 15%) if the tax remains unpaid.
2. Enforcement Actions:
   • IRAS may take legal action to recover unpaid taxes.
3. Disruptions in Business Operations:
   • Delays in processing refunds or additional compliance checks.

Best Practices for Filing and Paying Withholding Tax

1. Monitor Payment Deadlines:
   • Use accounting software or a calendar system to track withholding tax deadlines.
2. Maintain Accurate Records:
   • Keep detailed records of payments, contracts, and communication with non-residents.
3. Seek Professional Advice:
   • Consult tax advisors for complex transactions to ensure accurate calculations.
4. File Electronically:
   • Use IRAS’s myTax Portal for faster and more efficient filing.

How Apexia Corporate Advisory Can Help

At Apexia Corporate Advisory, we offer expert services to ensure your withholding tax compliance is seamless and hassle-free. Our services include:

1. Withholding Tax Advisory
   • Guidance on taxable payments and applicable tax rates.
2. Filing Assistance
   • Prepare and file withholding tax returns accurately and on time.
3. Payment Management
   • Help you process payments to IRAS through various modes.
4. Compliance Reviews
   • Conduct reviews to identify potential gaps and ensure compliance with IRAS regulations.

Conclusion

Understanding when to file and pay withholding tax is critical for businesses working with non-residents in Singapore. By adhering to IRAS deadlines and maintaining accurate records, you can avoid penalties and ensure smooth operations. For professional support and tailored solutions, contact Apexia Corporate Advisory today.