Taxable Income of Non-Resident Professionals

The non-resident professional is subjected to a final withholding tax of 15% on the gross income /fee derived from services performed in Singapore.

Under the 15% withholding tax treatment:

1. Gross income refers to both cash and non-cash payments and includes:
   1. accommodation provided/reimbursed by payer;
   2. airfare provided/reimbursed by payer;
   3. allowance;
   4. honorarium/speaker's fee;
   5. per diem; and
   6. transport (e.g. airport transfers) and meals provided/reimbursed by payer
2. No deduction is allowed against the gross income/fees for any expenses incurred;
3. We will not send tax bill to the non-resident professional as the payer has accounted for the withholding tax; and
4. The following are not applicable
   1. concession of not taxing accommodation provided for 60 days or less in any calendar year and cost of airfare
   2. tax exemption for short-term employment  of 60 days or less in a calendar year. 

The non-resident professional can opt to be taxed on the net income (i.e. gross income less allowable expenses) at the non-resident rate of 22% instead of 15% of the gross income.

Under the option:

1. As a concession, the following are not taxable :
   • cost of airfare borne by the payer and
   • cost of accommodation (excluding value of food) provided by the payer for short-term engagement of 60 days or less in a calendar year. 
2. Where the cost of accommodation is borne for more than 60 days, the cost of the entire period is taxable. For example, the payer bears for 70 days of accommodation in a calendar year, the full cost is taxable.
3. Only expenses which are wholly and exclusively incurred by the non-resident professional in the production of the Singapore-sourced income and which are not reimbursed by the payer are tax deductible.
4. As a concession, the following expenses incurred by the non-resident professional are deductible:
   • Cost of airfare and
   • Cost of accommodation (excluding value of food) for short-term engagement of 60 days or less in a calendar year.
5. Where the cost of accommodation incurred by the non-resident professional exceeds 60 days, the cost of the entire period is not deductible. For example, the non-resident professional pays for 70 days of accommodation in a calendar year, the cost of the entire stay is not deductible.
6. Private expenses (e.g. value of food and ground transfers from and to airport) and expenses incurred to put the non-resident professional in a position to earn the income (e.g. transport expenses incurred from hotel to venue of service and back) are not deductible.
   
   

We will not send tax bill to the non-resident professional as the payer has accounted for withholding tax.

Exercising Option to be Taxed on Net Income at 22% 

This option is irrevocable and must be exercised on a per engagement basis. This means that all income and benefits derived from the same engagement are subject to withholding tax at 22%.

The option must be exercised:

1. By the non-resident professional/the payer by completing and endorsing on section 3 of the  Form IR37C.

2a. Up-front i.e. before or at the same time as when the tax is withheld and remitted to IRAS; or

2b. If tax at 15% has been remitted to IRAS by 15^th of the second month from the date of payment to the non-resident professional (for date of payment from 28 Nov 2013).