Withholding tax (for payment to non-residents or non-resident companies)

Different tax treatment between non-resident professional and employee

Withholding tax (for payment to non-residents or non-resident companies)

	Non-resident professional	Non-resident employee
Tax obligations of payer / employer	Payer must: withhold tax at 15% of gross income OR 20% of net income if option is exercised file Form IR37C (72KB) and pay the withholding tax by the 15th of the following month from the date of payment if the 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 if date of payment is from 01 July 2012 NEW!	Employer must: file Form IR21 at least one month before cessation of employment and withhold all monies due to employee until tax clearance is given or expiry of 30 days after CIT has been notified, whichever the earlier.
Acknowledgement	Payer will receive a Letter of Confirmation No tax bill will be issued to the professional	Employee will receive a tax bill Employer will receive a Directive on the amount of monies to be remitted to IRAS & released to employee, if applicable
Tax treatment	Tax exemption for short term employment of 60 days or less in a calendar year not applicable	Employment income exempt for short term employment of 60 days or less in a calendar year Employment income taxed at non-resident rate of 15% or resident rate, whichever gives rise to higher tax for employment exercised for 61 to 182 days in a calendar year

Non-resident professional

Non-resident employee

Tax obligations of payer / employer

Payer must:

withhold tax at 15% of gross income OR 20% of net income if option is exercised
file Form IR37C (72KB) and
pay the withholding tax by the 15th of the following month from the date of payment if the 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 if date of payment is from 01 July 2012 NEW!

Employer must:

file Form IR21 at least one month before cessation of employment and
withhold all monies due to employee until tax clearance is given or expiry of 30 days after CIT has been notified, whichever the earlier.

Acknowledgement

Employee will receive a tax bill
Employer will receive a Directive on the amount of monies to be remitted to IRAS & released to employee, if applicable

Tax treatment

Tax exemption for short term employment of 60 days or less in a calendar year not applicable

Employment income exempt for short term employment of 60 days or less in a calendar year
Employment income taxed at non-resident rate of 15% or resident rate, whichever gives rise to higher tax for employment exercised for 61 to 182 days in a calendar year

Last Updated on 30 October 2012

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