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Non-Resident Professionals vs Employees

Differences between non-resident professionals and employees in relation to tax obligations, tax treatment and acknowledgements.
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Tax Obligations of Payer/Employer

Non-resident professionalNon-resident employee

Payer must:

  1. Withhold tax at 15% of gross income or 22% (20% for period of engagement prior to 1 Jan 2016) of net income if option is exercised;
  2. e-File via myTax Portal and select the nature of payment ‘For payment to non-resident individual/firms exercising profession/vocation in Singapore’; and  
    1. Pay the withholding tax by the 15th of the second month from the date of payment if date of payment is from 1 Jul 2012.

    Employer must:

    1. File Form IR21 at least one month before cessation of employment; and
    2. Withhold all monies due to employee until tax clearance is given or expiry of 30 days after IRAS has been notified, whichever the earlier.
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    Acknowledgements

    Non-resident professionalNon-resident employee
    1. Payer will receive a Confirmation of Payment (CP) letter
    2. No tax bill will be issued to the non-resident professional.
    1. Employee will receive a tax bill.
    2. Employer will receive a Directive on the amount of monies to be remitted to IRAS and release the balance to employee, if applicable.
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    Tax Treatment

    Non-resident professionalNon-resident employee

    No tax exemption for short-term engagement of 60 days or less in a calendar year

    1. Tax exemption is applicable for short term employment of 60 days or less in a calendar year.
    2. Employment income taxed at non-resident rate of 15% or resident rate, whichever that gives rise to higher tax for employment exercised for 61 to 182 days in a calendar year.
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    • #1 I am a visiting professional. Will I be exempt from tax under the short-term employment if I render my services for not more than 60 days in the calendar year in Singapore?

      The tax exemption for short-term employment of 60 days or less applies only to employees.

      It does not apply to visiting non-resident professionals. However, you may qualify for exemption if you meet the conditions under the tax treaty. Please use our Tax Treaty Calculator to check if you are eligible for the tax treaty exemption.

    • #2 I am engaged on a one-year contract to render services in Singapore. I will be here for a total of three visits of two weeks each. Am I liable to tax in Singapore?

      Your tax liability depends on the capacity in which your services are rendered.  

      If your services are rendered on behalf of your foreign employer, your income will be exempt for employment exercised in Singapore for 60 days or less in a calendar year.

      Withholding tax will apply if you render services here in your own capacity (i.e. you exercise any profession or vocation of an independent nature under contract for service).

       

    • #3 My period of engagement is for three years. For each calendar year, I will be in Singapore for 90 days to provide consultancy services as an independent consultant. Can I be considered as a resident of Singapore for income tax purposes based on my total engagement period of three years?

      No. You will be considered as a non-resident professional based on your physical presence in Singapore which is less than 183 days for each of the calendar year.