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Withholding Tax
Under the Singapore Income Tax Act, a payer must withhold tax on specific type of payments made to non-resident companies or individuals and remit it to the Inland Revenue Authority of Singapore (IRAS). This withholding tax must be filed and paid by the 15th of the second month following the date of payment.
In Zoho Invoice, you can now record withholding tax directly while creating a transaction.
Types of Withholding Tax
Based on the type of payment made to non-residents, withholding tax is classified as follows:
| Withholding Tax | Tax Rate% |
|---|---|
| Interest, Commission, Fees | 15 |
| Management and Technical Fees | 17 |
| Non-Resident Professionals | 15 |
| Public Entertainers | 10 |
| Rent paid to a non-resident for leasing machinery, vehicles, or equipment. | 15 |
| Royalty Payments | 10 |
Enable Withholding Tax
Before deducting withholding tax from your transactions, you need to enable it. Here’s how:
- Go to Settings and select Taxes.
- In the Withholding Tax pane, choose Withholding Tax Settings.
- Mark Enable Withholding Tax.
- Mark the Enable Withholding Tax Override for sales transactions option if you want to withhold tax on sales transactions and manually override the withholding tax amount.
- To round off the withholding tax at either the transaction level or line item level, click the dropdown next to Round Off Withholding Tax and select your preferred option.
- Click Save.
Withholding tax will now be enabled for your organization.
Create Customers
To create and enable withholding tax for a customer:
- Go to Customers.
- Click + New in the top right corner of the page.
- Enter all the required and mandatory details on the New Customer page.
- Navigate to the Other Details tab and mark the Enable Withholding Tax for this Customer option.
- Click Save.
Withholding tax will now be enabled for this customer.
Create Transactions and Record Payments
You can create invoices and deduct withholding tax on them. Here’s how:
- Go to Invoices.
- Click + New in the top-right corner of the page.
- In the New Invoice page, enter all the mandatory and required details.
- Mark the Apply Withholding Tax option for each individual line item to which you want to apply withholding tax in the item table.
Note: The Apply Withholding Tax option will appear only if withholding tax is enabled for the customer.
- Select the Withholding Tax rate you want to apply to your transaction from the dropdown.
- You can view the total withholding tax deducted for the transaction in the Total Withholding Tax Amount section.
- Click Save and Send or click the dropdown next to it to Save and Print, Save and Share, or Save and Send Later.
Note: The withholding tax deduction will not be applied to the total invoice amount and will not impact any accounts directly. It can only be recorded at the time of payment.
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