Withholding Tax in Singapore

It is an important reminder that you must withhold tax whenever you make payments to non-residents. As non-residents do not have any presence in Singapore, there is no way the local tax authorities can tax their income sourced in or derived from Singapore. Therefore, the responsibility is imposed on us to withhold tax before remitting the net payment to non-residents.

The rate of withholding tax depends on the nature of the expense of the payments made to non-residents. It ranges from 0% to 15%.

The following are the types of expenses that attract withholding tax when you make payments to non-resident companies:

  • Interest, commission, and fees related to loans
  • Royalties or other payments for the use of or the right to use any movable property
  • Payments for the use of or the right to use scientific, technical, industrial, or commercial knowledge or information
  • Management fees
  • Rent or other payments for the use of any movable property
  • Purchase of real property from a non-resident property trader
  • Structured products
  • Distribution of REITs

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ACRA Cancels Registration of Filing Agent and Qualified Individual for AML/CFT Breaches

The Accounting and Corporate Regulatory Authority (ACRA) had cancelled the registrations of filing agent (RFA) and qualified individual (RQI) on 18 January 2024. The registrations were cancelled in view of breaches of anti-money laundering and countering the financing of terrorism (AML/CFT) controls under the ACRA (Filing Agents and Qualified Individuals) Regulations 2015 (the “ACRA Regulations”).

Some of the basic AMT/CFT controls that a RFA and RQI are required to exercise are as follows:

(a) perform additional customer due diligence measures when a customer is not physically present during onboarding;

(b) inquiring if there exists any beneficial owner in relation to some of its customers; and

(c) perform risk assessments i

RQIs and RFAs provide corporate secretarial services for business entities, such as helping customers to incorporate companies, file annual returns and fulfil other filing requirements under the Companies Act 1967 or other Acts under ACRA’s purview. RQIs and RFAs are required to perform customer due diligence measures in accordance with the ACRA Regulations, and conduct their business in such a manner as to guard against the facilitation of money laundering and the financing of terrorism. RQIs and RFAs must also satisfy statutory requirements such as being fit and proper persons, to be registered or continue to be registered.

RQIs and RFAs who breach their statutory obligations may be subject to enforcement actions, such as financial penalties of up to $10,000 or $25,000 per breach respectively or have their registrations with ACRA suspended or cancelled.

Therefore, RQIs and RFAs play an important role in helping to detect and combat illicit activities.

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