Tax obligations (withholding tax)

Do I have to withhold tax?

Scenario 1

Director’s remuneration (excluding gains from stock option/other share ownership plans (ESOP/ESOW) made to foreign individual in his capacity of non resident director of a company incorporated in Singapore

Employer's obligations:

• Withhold tax at 20% of director’s remuneration;
• File Form IR37 (73KB) and
• Pay the withholding tax by the 15th of the following month from the date of payment to the director if date of payment is prior to 01 July 2012; or
• Pay the withholding tax by the 15th of the second month from the date of payment to the non-resident director if date of payment is from 01 July 2012 NEW!  
  
  
  

It does not matter where the board meeting was held or that he was not physically working in Singapore. Such payments are taxable regardless of his physical presence in Singapore.


Confirmation of payment
Confirmation of Payment letter (CP) will be issued within 21 days from the receipt of payment and form IR37.

Incomplete form IR37 will delay the issuance of CP.

For withholding tax payment less than $10, CP will not be issued. 

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Scenario 2

Gains from ESOP/ESOW made to foreign individual in his capacity as non resident director of a company incorporated in Singapore

•  You must file the Form IR21A to report the gains from ESOP/ESOW within 30 days from the date of exercise, assignment, release or acquisition of the shares.
• The non resident director will receive a tax bill informing him of the amount of tax to pay

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Scenario 3

Director’s remuneration and employment income made to a foreign individual in his capacity as a  non resident director and an executive director of a company incorporated in Singapore

Example 1 – Physical presence in Singapore is less than 183 days in a calendar year

The foreign individual was appointed as an executive and board director of a Singapore incorporated company on 1 Jan 2010 . His remuneration is as follows:

Your (employer's) obligations:

• withhold and remit tax of $2,000 ($10,000 @ 20%) together with the Form IR37 by 15 July 2010 [or the 15th of the second month following the date of payment if the date of payment is from 01 July 2012 NEW!] as your physical presence in Singapore is less than 183 days from 1 Jan 2010 to 1 Jun 2010
• withhold and remit tax of $3,000 ($15,000 @ 20%) together with the Form IR37 by 15 Jan 2011 [or the 15th of the second month following the date of payment if the date of payment is from 01 July 2012 NEW!] as your physical presence in Singapore is less than 183 days from 1 Jan 2010 to 31 Dec 2010
• Prepare Form IR8A and give you a copy by 1 March 2011 for your tax filing. For e-submission of IR8A, the ‘S45 indicator’ on the IR8A screen must be checked if tax has been withheld on the  Director’s remuneration/fees
• seek tax clearance to settle your income tax when you decide to cease employment

Confirmation of payment

Confirmation of Payment letter (CP) will be issued within 21 days from the receipt of payment and form IR37.

Incomplete form IR37 will delay the issuance of CP.

For withholding tax payment less than $10, CP will not be issued. 

Your (employee's) obligations:

• declare your employment income in the tax return for the Year of Assessment 2011 as follows:
• Salary   $60,000 ($5,000 x 12 months)
• Pay your tax upon receipt of the tax bill
• Ensure there is no outstanding tax when you decide to cease employment with your employer

You do not need to report your Director’s remuneration/fees received as a Board Director as the payer must account for the withholding tax on the payment made to you as a non-resident.

Example 2 – Physical presence in Singapore is at least 183 days in a calendar year

Your (employer's) obligations :

• withhold and remit tax at $2,000 ($10,000 @ 20%) together with the Form IR37 by 15 July 2010 as your physical presence in Singapore is less than 183 days from 1 Jan 2010 to 1 Jun 2010
• Prepare Form IR8A and give you a copy by 1 March 2011 for your tax filing. For e-submission of IR8A, the ‘S45 indicator’ on the IR8A screen must be checked if tax has been withheld on the Director’s remuneration/fees
• seek tax clearance to settle your income tax when you decide to cease employment

Confirmation of payment

Confirmation of Payment letter (CP) will be issued within 21 days from the receipt of payment and form IR37.

Incomplete form IR37 will delay the issuance of CP.

For withholding tax payment less than $10, CP will not be issued. 

Withholding tax is not applicable for the Director’s fees of $15,000 as your physical presence from 1 Jan 2010 to 31 Dec 2010 is more than 183 days

Your (employee's) obligations:

• declare your employment income in the tax return for the Year of Assessment 2011 as follows:

  Salary	$60,000 ($5,000 x 12 months)
  Director's fee	$25,000

   

• enter the amount of withholding tax $2,000 in the field "Tax deducted at source"

• furnish a schedule of physical presence to show that you were physically present in Singapore for at least 183 days in the calendar year 2010
• Pay your tax upon receipt of the tax bill
• Ensure there is no outstanding tax when you decide to cease employment with your employer
  
  
  
  

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