S45 Withholding Tax and Partnerships

Withholding tax imposed on non-resident partners in a partnership and waiver for partnerships with at least one resident partner.

Withholding Tax for Payments to Non-Residents

Under the law, when a person makes payment of a specified nature (such as interest, royalties, management fees) to a non-resident person , he has to deduct a withholding tax from the payment, and pay the amount withheld to IRAS.

For details, please refer to Withholding Tax .

Withholding Tax and Non-Resident Partners

For payments to partnerships, if the partnership comprises partners who are non-resident, the payer has to deduct withholding tax from payments made to the partnership, including payments for services rendered by the partnership.

The tax to be withheld will be on that portion of the payment attributable to non-resident partners of the partnership.

Waiving Requirement to Withhold Tax

In view of the difficulties involved in strictly complying with the withholding tax requirement for partnerships, the requirement to withhold tax under s45 has now been waived for partnerships with at least one resident partner .

This waiver is granted on account that all partnerships doing business in Singapore would have to file a yearly tax return (Form P) to declare all its income, including the payments on which withholding tax is applicable. 

Partnerships with 100% Non-Resident Partners

The partnership is required to submit an undertaking from the head office of the partnership that in the event the partnership in Singapore defaults on tax payments arising from the waiver, the head office shall be liable for any outstanding tax arising from the waiver.

Change in the Composition of Partners

Partnerships are required to notify the Comptroller immediately should there be a change in the composition of partners from one that has at least one resident partner to one that comprises of only non-residents upon the withdrawal of its resident partner/partners.

To continue to enjoy the waiver, the partnership should submit the undertaking from the head office together with the notification of change in composition of partners to the Comptroller.

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