How to calculate in detail Withholding Tax Singapore? |
Posted: April 13, 2023 |
How to calculate in detail Withholding Tax Singapore?When it comes to taxation, Singapore is known for having a relatively low corporate tax rate compared to many other countries. However, there are still other taxes that must be taken into consideration. One such tax is withholding tax. In this article, we will discuss withholding tax in Singapore. What is Withholding Tax?Withholding tax is a type of income tax that is withheld by employers and other payers from payments made to individuals and businesses. Such payments can include wages, salaries, dividends, interest, rental income, and royalties. The payers must then remit the withheld taxes to the Inland Revenue Authority of Singapore (IRAS). The purpose of withholding tax is to ensure that taxes are paid on income in the same year that it is earned. It is also a way for the government to ensure that taxpayers do not avoid their tax obligations. Who is Subject to Withholding Tax?In Singapore, the withholding tax applies to both individuals and businesses. Generally, individuals are subject to withholding tax if they are receiving payments from sources in Singapore, such as wages and salaries from employment. For businesses, Withholding Tax in Singapore applies to payments from sources such as interest, dividends, rents, royalties, and commissions. In addition, businesses must also withhold tax on payments to non-residents for services rendered. How is Withholding Tax Singapore Calculated?Withholding tax is a form of tax that is deducted from a person’s income at the source of payment. In Singapore, this tax applies to income such as salary, director’s fees, and commission. The amount of withholding tax due depends on the individual’s residence status, total income earned and the type of income. Residency status is the primary factor that determines the withholding tax rate. Singapore residents are subject to progressive rates, ranging from 0% to 22%, while non-residents are subject to a flat rate between 15% to 22%. For non-residents, the rate of withholding tax is increased for certain types of income such as gains from the sale of immovable property, royalties and dividends. Total income earned is also a factor in the calculation of withholding tax. For Singapore residents, the total income includes earnings such as salary and director’s fees. For non-residents, the total income includes all income generated from sources within Singapore, such as rental income and investment income. The amount of withholding tax due is calculated by multiplying the income earned by the applicable tax rate. This amount is then deducted from the individual’s income and remitted to the Inland Revenue Authority of Singapore (IRAS). The individual is then required to file an income tax return to declare the total income earned and the amount of withholding tax paid. In summary, the amount of withholding tax payable in Singapore depends on the individual’s residence status, total income earned, and the type of income. It is calculated by multiplying the income earned by the applicable tax rate and is remitted to IRAS. Individuals are required to file an income tax return to declare the total income earned and the amount of withholding tax paid. ConclusionBy understanding the rules and regulations regarding withholding tax, taxpayers can ensure they are in compliance with their tax obligations. For more information, you can read the article about Withholding Tax Singapore on: https://bbcincorp.com/sg/articles/a-guide-to-withholding-tax-in-singapore Contact Us: BBCIncorp Pte. Ltd Email: [email protected] Phone: +65 6011 8200 Address: 9 RAFFLES PLACE, #29-05 REPUBLIC PLAZA, SINGAPORE (048619)
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