§ 45 — Withholding of tax in respect of interest paid to non‑resident persons

45.—(1) Where a person is liable to pay to another person not known to the firstmentioned person to be resident in Singapore any interest which is chargeable to tax under this Act, the firstmentioned person must —(a)

deduct therefrom tax —(i)

where the person to be paid is an individual or a Hindu joint family, at the rate of 24%;[Act 33 of 2022 wef 01/01/2023]

(ii)

where the person to be paid is any other person, at the rate of 17%; or

(iii)

where section 43(3) or (3A) is applicable to the person to be paid, at the rate specified in that provision,

on every dollar of the interest; and

(b)

immediately give notice of the deduction of tax and pay to the Comptroller the amount so deducted,

and every such amount deducted is a debt due from the firstmentioned person to the Government and is recoverable in the manner provided by section 89.

[2/2016]

(1A) Despite subsection (1), tax must be deducted at the rate of 18% on every payment (other than payment subject to tax at the rate specified in section 43(3) or (3A)) made on or after 1 January 2009 which would be assessable on the person receiving the payment for the year of assessment 2009.

(1B) The notice under subsection (1)(b) must be given using the electronic service, except that the Comptroller may in any particular case or class of cases permit the notice to be given in any other manner.[2/2016]

(1C) The Minister may, by rules made under section 7, substitute the rate in subsection (1)(a)(i), (ii) or (iii) with a higher or lower rate (including 0%) for any person or class of persons that is or are subject to that subsection, and subsection (1) applies to that person or class of persons accordingly.[34/2016]

(1D) The rules mentioned in subsection (1C) may —(a)

provide that the substitute rate applies only if such conditions as may be specified in the rules are satisfied; and

(b)

prescribe different substitute rates for different persons or classes of persons.[34/2016]

(2) The Comptroller may —(a)

if he or she thinks fit, allow any person or class of persons to give notice of the deduction of tax and make payment of the amount so deducted within such other period and subject to such conditions as the Comptroller may determine; and

(b)

by written notice require any person who pays such interest to deduct and account for tax at a higher or lower rate than the rate in subsection (1)(a)(i), (ii) or (iii), or the rate prescribed by rules mentioned in subsection (1C) in substitution for that rate (as the case may be) on every dollar of such interest or permit such interest to be paid without deduction of tax.[2/2016; 34/2016]

(3) Where a person fails to make a deduction of tax which the person is required to make under subsection (1), any amount which the person fails to deduct is a debt due from the person to the Government and is recoverable as such.

(4) If the amount of tax which is required to be deducted under subsection (1) is not paid to the Comptroller —(a)

by the 15th day of the second month following the month in which the interest from which the tax is to be deducted is paid, or such other date as may be allowed under subsection (2)(a), a sum equal to 5% of such amount of tax is payable; and

(b)

within 30 days after the time specified in paragraph (a), an additional penalty of 1% of such amount of tax is payable for each completed month that the tax remains unpaid, but the total additional penalty under this paragraph must not exceed 15% of the amount of tax outstanding.[34/2016]

(5) Without affecting any other provision of this Act, if any person after deducting any tax under subsection (1) fails to give notice of such deduction to the Comptroller in the manner referred to in subsection (1B) and by the time specified in subsection (4)(a), the person shall be guilty of an offence and shall on conviction pay a penalty equal to 3 times the amount of tax so deducted and shall also be liable to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 3 years or to both.[2/2016; 39/2017]

(6) Where an individual has been convicted for 3 or more offences under this section, the imprisonment the individual shall be liable to shall be not less than 6 months.

(7) The Comptroller may —(a)

compound an offence under subsection (5) and may before judgment stay or compound any proceedings thereunder; and

(b)

for any good cause remit the whole or any part of the penalty payable under subsection (4).

(8) For the purposes of this section —(a)

the manager or principal officer of a company is answerable for doing all such acts, matters and things as are required to be done by the company under this section; and

(b)

interest is deemed to have been paid by a person to another person although it is not actually paid over to the other person but is reinvested, accumulated, capitalised, carried to any reserve or credited to any account however designated, or otherwise dealt with on behalf of the other person.

(9) This section does not apply to —(a)

any interest derived from any qualifying debt securities issued during the period from 27 February 1999 to 31 December 2028 (both dates inclusive), subject to such conditions as the Minister may impose;[Act 30 of 2023 wef 30/10/2023]

(b)

any interest derived from any qualifying project debt securities issued during the period from 1 November 2006 to 31 December 2025 (both dates inclusive), subject to such conditions as the Minister may impose;[Act 33 of 2022 wef 04/11/2022]

(c)

any interest liable to be paid on or after 21 February 2014 by a person to a branch in Singapore of a company incorporated outside Singapore and not known to the person to be resident in Singapore.[37/2014; 45/2018]

(10) In this section, “qualifying debt securities” and “qualifying project debt securities” have the meanings given by section 13(16).

(11) To avoid doubt, in this section, “interest” includes the part of any payment liable to be made by a lessee to a lessor under a finance lease of any machinery or plant treated as sold by the lessor to the lessee pursuant to regulations made under section 10C(1), that is income of the lessor under section 10C(2A).[45/2018]

—(1) Where a person is liable to pay to another person not known to the firstmentioned person to be resident in Singapore any interest which is chargeable to tax under this Act, the firstmentioned person must —(a)

deduct therefrom tax —(i)

where the person to be paid is an individual or a Hindu joint family, at the rate of 24%;[Act 33 of 2022 wef 01/01/2023]

(ii)

where the person to be paid is any other person, at the rate of 17%; or

(iii)

where section 43(3) or (3A) is applicable to the person to be paid, at the rate specified in that provision,

on every dollar of the interest; and

(b)

immediately give notice of the deduction of tax and pay to the Comptroller the amount so deducted,

and every such amount deducted is a debt due from the firstmentioned person to the Government and is recoverable in the manner provided by section 89.

[2/2016]

(1A) Despite subsection (1), tax must be deducted at the rate of 18% on every payment (other than payment subject to tax at the rate specified in section 43(3) or (3A)) made on or after 1 January 2009 which would be assessable on the person receiving the payment for the year of assessment 2009.

(1B) The notice under subsection (1)(b) must be given using the electronic service, except that the Comptroller may in any particular case or class of cases permit the notice to be given in any other manner.[2/2016]

(1C) The Minister may, by rules made under section 7, substitute the rate in subsection (1)(a)(i), (ii) or (iii) with a higher or lower rate (including 0%) for any person or class of persons that is or are subject to that subsection, and subsection (1) applies to that person or class of persons accordingly.[34/2016]

(1D) The rules mentioned in subsection (1C) may —(a)

provide that the substitute rate applies only if such conditions as may be specified in the rules are satisfied; and

(b)

prescribe different substitute rates for different persons or classes of persons.[34/2016]

(2) The Comptroller may —(a)

if he or she thinks fit, allow any person or class of persons to give notice of the deduction of tax and make payment of the amount so deducted within such other period and subject to such conditions as the Comptroller may determine; and

(b)

by written notice require any person who pays such interest to deduct and account for tax at a higher or lower rate than the rate in subsection (1)(a)(i), (ii) or (iii), or the rate prescribed by rules mentioned in subsection (1C) in substitution for that rate (as the case may be) on every dollar of such interest or permit such interest to be paid without deduction of tax.[2/2016; 34/2016]

(3) Where a person fails to make a deduction of tax which the person is required to make under subsection (1), any amount which the person fails to deduct is a debt due from the person to the Government and is recoverable as such.

(4) If the amount of tax which is required to be deducted under subsection (1) is not paid to the Comptroller —(a)

by the 15th day of the second month following the month in which the interest from which the tax is to be deducted is paid, or such other date as may be allowed under subsection (2)(a), a sum equal to 5% of such amount of tax is payable; and

(b)

within 30 days after the time specified in paragraph (a), an additional penalty of 1% of such amount of tax is payable for each completed month that the tax remains unpaid, but the total additional penalty under this paragraph must not exceed 15% of the amount of tax outstanding.[34/2016]

(5) Without affecting any other provision of this Act, if any person after deducting any tax under subsection (1) fails to give notice of such deduction to the Comptroller in the manner referred to in subsection (1B) and by the time specified in subsection (4)(a), the person shall be guilty of an offence and shall on conviction pay a penalty equal to 3 times the amount of tax so deducted and shall also be liable to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 3 years or to both.[2/2016; 39/2017]

(6) Where an individual has been convicted for 3 or more offences under this section, the imprisonment the individual shall be liable to shall be not less than 6 months.

(7) The Comptroller may —(a)

compound an offence under subsection (5) and may before judgment stay or compound any proceedings thereunder; and

(b)

for any good cause remit the whole or any part of the penalty payable under subsection (4).

(8) For the purposes of this section —(a)

the manager or principal officer of a company is answerable for doing all such acts, matters and things as are required to be done by the company under this section; and

(b)

interest is deemed to have been paid by a person to another person although it is not actually paid over to the other person but is reinvested, accumulated, capitalised, carried to any reserve or credited to any account however designated, or otherwise dealt with on behalf of the other person.

(9) This section does not apply to —(a)

any interest derived from any qualifying debt securities issued during the period from 27 February 1999 to 31 December 2028 (both dates inclusive), subject to such conditions as the Minister may impose;[Act 30 of 2023 wef 30/10/2023]

(b)

any interest derived from any qualifying project debt securities issued during the period from 1 November 2006 to 31 December 2025 (both dates inclusive), subject to such conditions as the Minister may impose;[Act 33 of 2022 wef 04/11/2022]

(c)

any interest liable to be paid on or after 21 February 2014 by a person to a branch in Singapore of a company incorporated outside Singapore and not known to the person to be resident in Singapore.[37/2014; 45/2018]

(10) In this section, “qualifying debt securities” and “qualifying project debt securities” have the meanings given by section 13(16).

(11) To avoid doubt, in this section, “interest” includes the part of any payment liable to be made by a lessee to a lessor under a finance lease of any machinery or plant treated as sold by the lessor to the lessee pursuant to regulations made under section 10C(1), that is income of the lessor under section 10C(2A).[45/2018]