Singapore withholding tax guidance clarifies payment date determination

The Inland Revenue Authority of Singapore, in a new e-Tax guide dated November 8, explains the determination of the date of income payments for purposes of withholding tax requirements for payments made or deemed made to non-resident persons.

The guidance also clarifies withholding tax filing and payment due dates, as well as late payment penalties.

Under the Singapore Income Tax Act, persons making payments to a nonresident person of interest that is chargeable to tax must deduct tax from the payment at the appropriate rate. Where the interest is not actually paid to the nonresident person but reinvested or otherwise held on account for the nonresident person, it is deemed paid on the date that it is so reinvested or designated. The withholding tax requirement similarly applies to royalties, management fees, and certain other types of fees.

Generally, the withholding tax must be accounted for on the earliest of the date that the liability arises under the terms of an applicable contract, the date of invoice if no contract, the date the income is credited to the non-resident or the actual date of payment.

The guidance clarifies and illustrates the application of these different possible dates of payment.

For instance, in the case of a contract stipulating payment each quarter, the guidance states that the date of payment will generally be deemed to be the last day of the quarter. However, if the contract further stipulates that payment is made on-demand, then the date of payment would instead be the date that such demand is made.

In another example – relating to the determination of the date of payment based on an invoice – the guidance clarifies that the date of the invoice remains the payment date even if the nonresident gives the payer an extension of time to pay.

Regarding the timeline for filing and paying withholding tax, the guidance states that the due date is the 15th of the second month from the date of payment. If not received by the due date, a 5% late payment penalty is imposed. Additional penalties may be imposed if still not paid within a further 30 days.