Taxes: Withholding, Capital Gains, Trusts, Estate Duty, Stamp Duty

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Taxes: Withholding, Capital Gains, Trusts, Estate Duty, Stamp Duty

Disclaimer
Tax law is complex and every effort has been made to offer information that is current, correct and clearly expressed. The information in this summary is intended to be no more than a general overview of the position and certain details have been deliberately omitted. The contents of this page should not be taken as an authoritative statement of Singapore tax law and practice. Neither the author nor the publisher are responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal, accounting or tax advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.

Stamp Duty

Stamp duty is levied on some commercial and legal documents concerning transactions. It must be paid even if the transaction is eventually aborted.

Not all documents are subject to duty; stamp duty is payable only on documents described in the First Schedule to the Stamp Duties Act. This covers only documents relating to immovable property, stocks and shares. These include a sale or mortgage of immovable property, as well as shares or leases of immovable property.

• See the Inland Revenue Authority Singapore (IRAS) website for more information: Click here

Estate Duty

When a person dies in Singapore Estate Duty must be paid on all their Singapore assets, both immoveable (land and buildings, for example), and moveable (cash, bank accounts, CPF funds, insurance monies, motor vehicles, for example). Immoveable assets outside of Singapore are not taxed.

In addition some gifts made by the deceased are also liable to Estate Duty:

• A gift made five years before death
• Any gift, regardless of when it was given, if the person to whom it was given did not benefit from the gift immediately to the exclusion of the donor
• A charitable gift made twelve months before the death
• See the Inland Revenue Authority Singapore (IRAS) website for more information: Click here 

Trusts

The administrator or executor of a trust will not have to pay tax on any trust income distributed to Singapore residents before 31 March in the year following the year of assessment. Trust income that is not distributed within this timeframe is taxed at a flat rate of 22 percent.

Any beneficiaries of a trust income will be assessed on the income received by them at their personal tax rates in the year of assessment. Beneficiaries have to declare the entitlement of income in their personal income tax forms. However, where there are non-resident beneficiaries of Singapore, the trustee will have to pay tax on their shares of entitlement at a flat rate of 20 percent. 

• See the Inland Revenue Authority Singapore (IRAS) website for more information: Click here

Capital Gains Tax

Capital gains are not subject to tax in Singapore. For instance, if a person buys and sells shares at a profit, the profit is not subject to tax. However, the dividends earned from shares are income and subject to income tax.

Withholding Tax

A non resident is liable to pay income tax on income earned within Singapore. (For tax purposes an individual is considered a non resident when working or living Singapore for less than 183 days per year.)

If a person or a Singapore-registered company makes a payment of a specified nature to a non resident they are required by law to withhold a percentage of that payment and remit it to the Comptroller of Income Tax.

The local payer in Singapore is required to withhold tax at:

• 15 percent of the gross income/fees payable to the non-resident professionals
  or
• The non resident rate if the non-resident professional elects to be taxed on net income

The tax remittance must be made by the 15th of the month following the date the payment was made. For example, if the payer is liable to make an interest payment to a non-resident person on 5 April, he has to notify the Comptroller of Income Tax and remit the tax withheld to IRAS by 15 May.

The types of payment subject to Income Tax and the Withholding Tax Rates are:

• Interest
• Royalties
• Management fees and service fees
• Rental from use of movable properties
• Non-resident director's remuneration
• Gains from real property transactions

The types of income that a non-resident professional might have which would be subject to withholding tax are:

• Payment of income derived by a non-resident professional from the exercise of a profession or vocation in Singapore
• Payment of income made to a non-resident professional who operates through a foreign firm

• See the Inland Revenue Authority Singapore (IRAS) website for more information: Click here 
• The form required for withholding taxes can be downloaded: Click here (PDF)

Link-up between IRAS and MDA

From 1998, the Inland Revenue Authority of Singapore has linked up with Media Development Authority (MDA). With this link-up, IRAS will send a combined bill for Property Tax and the TV Licence fee.

Tenants of residential property should agree with the owners of the property who pays the TV Licence fee. TV licences can be obtained from any post office.

Cess

Cess is levied at the rate of one percent on all cessable items sold by tourist hotels, tourist food establishments and tourist public houses. IRAS administers and collects Cess on behalf of The Singapore Tourism Board (STB).

Cessable items include:

• Room occupied in hotel
• Sale of food or drink
• Admission charges
• Hire of coats and ties
• Sale of admission tickets or cover charge
• Corkage charge

• See the Inland Revenue Authority Singapore (IRAS) website for detailed information on registering for Cess and how to make payments: Click here 

Charities & Taxes

If an organisation is set up exclusively for charitable purposes it must apply to the Commissioner of Charities (IRAS office) for registration under the Charities Act. 

Some organisations are authorised to receive tax deductible donations. To do so, the organisation must be an approved Institution of A Public Character (IPC). Cash donations to IPCs are not taxed as long as the donor derived no benefit from the donation; the donor should give their name and NRIC (tax identity number) to the IPC who will pass it to IRAS. The tax deduction will then be made automatically in the donor's income tax assessment.

• See the Inland Revenue Authority Singapore (IRAS) website for more information: Click here

Further Information

• E-Tax Guides
• Downloadable tax forms
• Tax Treaties
• Tax Acts
• For links to international tax resources, organisations and foreign tax administrations as well as Singapore Government websites: Click here
• See the AngloINFO INFOrmation Pages on Corporate Tax
• See AngloINFO INFOrmation Page on Income Tax in Singapore
• See AngloINFO INFOrmation Page on Property Tax 
• See the IRAS website