FAQs

Yes. You must withhold tax on the fees paid to the consultant for professional services rendered in Singapore. It does not matter where the consultant is paid.

Where the amount of withholding tax is borne by the payer, the amount of tax allowance is a benefit and is taxable. See Example 2 on how the tax allowance is computed.

The withholding tax of 15% is a final tax on gross income/fees. No deduction will be allowed on any expenses incurred in the production of income. Under the option to be taxed at 20% of net income, these expenses are not deductible under your income as they are private in nature.

The tax exemption for short-term employment of 60 days or less does not apply to visiting non-resident professionals who exercise their profession in Singapore. Only visiting non-resident professionals who are employees would qualify for the exemption.

As his physical stay in Singapore is less than 183 days, he will be treated as a non-resident for tax purposes. If he is only in receipt of such fee for the year, he does not need to file the tax form as you have deducted 15% withholding tax. If he has received a tax form / tax bill, please forward the Confirmation of Payment for our review.

Whether you need to withhold tax would depend on whether the visiting professional needs to pay tax in Singapore under the provisions of the tax treaty. For example, under the tax treaty between Singapore and United Kingdom, the income derived by the non-resident professional from Singapore will be tax exempt provided:

a. He does not have a fixed base regularly available to him in Singapore for the purpose of performing his activities; or

b. He is not present in Singapore for not more than 183 days in any period of 12 months commencing or ending in the fiscal year concerned.

Example 1

If he (with no fixed base in Singapore) is in Singapore for a 5-month engagement in year 2008, his income derived during that period will be tax-exempt for Year of Assessment (YA) 2009 (See Chart 1).

 

Chart 1:  Tax Exempt for YA 2009 as presence in Singapore < 183 days

 

Example 2

However, if he comes to Singapore for another 5-month engagement in year 2009, his income derived from the first engagement in 2008 will then be taxable in Singapore in YA 2009 as he would have been present in Singapore for periods exceeding the aggregate of 183 days in the first 12-month period commencing from 1 July 2008 (See Chart 2).

His income derived from the second engagement in 2009 will be taxable in Singapore in YA 2010 as he would be present in Singapore for periods exceeding the aggregate of 183 days in the second 12-month period ending 31 July 2009 (See Chart 2).

 

 

 

Chart 2: Taxable for YA 2009 and YA 2010 as physical presence in Singapore > 183 days in first 12-month period from 1 Jul 2008 to 30 Jun 2009 and second 12-month period from 1 Aug 2008 to 31 Jul 2009 respectively

Under the 15% withholding tax treatment, the cost of accommodation (regardless of number of days) and airfare are subject to withholding tax at 15%. The payer must remit tax with a Form IR37C. Under the option to be taxed at 20% of net income, the cost of accommodation (< 60 days per year) and airfare are not taxable as a concession. The payer must still file a Form IR37C to elect for the option though withholding tax is not applicable.

Yes, as he is exercising a profession through his attendance in the seminar.

Only accommodation provided for not more than 60 days in a calendar year is not taxable under the option to be taxed on net income. In the case of a per diem allowance granted, the full per diem is subject to withholding tax. However, the non-resident professional may claim the actual amount expended for accommodation against his gross income.

They are liable to Singapore income tax on the per diem, airfare and hotel accommodation provided to you. If their stay in Singapore is 60 days or less in a calendar year, they may elect to be taxed at 20% of net income. Under this option, the airfare and accommodation provided are not taxable as a concession. The payer only needs to withhold tax at 20% on the amount of per diem paid.

He can only be taxed at 15% of gross income OR opt to be taxed at 20% of net income on all income arising from the same engagement. The option, once exercised is irrevocable.

No, you are not required to withhold tax on the income attributable to services rendered by the non-resident professional wholly outside Singapore even though his income may be paid by a company in Singapore.

No, you do not need to withhold tax on fee paid for services rendered outside Singapore.

The tax liability of the professional will depend on the capacity in which his services were rendered. If his services in Singapore were rendered on behalf of his foreign employer, his income will be exempt for employment exercised in Singapore for not more than 60 days in a calendar year. If he renders services here in his own capacity (i.e independent professional), withholding tax will apply.

The professional fees is subject to withholding tax. As the retainer fees are not income attributable to services performed outside Singapore, it is also subject to withholding tax in Singapore.

Please include service charge and GST when computing withholding tax.

No, unless the income/benefits are attributable to services (eg give a seminar/presentation, involved in meeting/discussion) performed by foreign consultant.

The foreign consultant should only claim for tax treaty exemption via Form IR586 online upon completion of his contract when his total physical presence in Singapore is known. Where the 'Result' in the tax treaty calculator shows that the tax treaty exemption applies, please proceed to complete Form IR586 online. The Form IR586 printout is to be given to the payer to submit together with Form IR37C to IRAS by the due date.