Status
The United States has no income tax treaty with Singapore. Payments to Singapore residents are withheld under the Code with no treaty reduction. The two countries have a tax information exchange agreement, which Treasury lists with the date November 13, 2018.
What to withhold
- U.S.-source fixed or determinable income (dividends, royalties, rents, interest that is not otherwise exempt, pay for services performed in the United States) is withheld on at 30% of the gross payment.
- The Code's own exemptions still apply: portfolio interest, bank deposit interest, and income effectively connected with a U.S. trade or business documented on Form W-8ECI.
- Pay for services performed entirely outside the United States is foreign-source: no withholding and no Form 1042-S.
- A W-8BEN or W-8BEN-E that claims treaty benefits for Singapore cannot be relied on for the claim, but still documents foreign status. A nonresident working in the U.S. has no treaty exemption to claim on Form 8233.
- Payments are reported on Form 1042-S with the payee's country code, whether or not tax was withheld.
The information exchange agreement
A tax information exchange agreement lets the IRS and the other jurisdiction's tax authority ask each other for, and share, information needed to enforce their own tax laws. It is not an income tax treaty: it sets no withholding rates, has no residence, permanent establishment or business profits rules, and gives a payee nothing to claim on a W-8BEN or W-8BEN-E. The Singapore agreement covers all U.S. federal taxes and Singapore income tax, property tax, goods and services tax and stamp duties. It provides for exchange on request, permits automatic and spontaneous exchange, and reaches bank and ownership information. It applies to taxable periods beginning on or after January 1 of the year after it enters into force.
Where payers go wrong
- Assuming a treaty exists. Singapore is a common regional headquarters, and many payers assume a treaty like the ones with Japan or Australia. There is none: royalties, dividends and other U.S.-source fixed income are withheld at 30%.
- Withholding on services performed in Singapore. Pay for work done outside the U.S. is foreign-source, so nothing is withheld and no Form 1042-S is filed.
- Missing the Code exemptions. Portfolio interest and bank deposit interest are exempt without a treaty.
Documents
Questions payers ask
Is there a U.S.-Singapore income tax treaty?
No. The United States and Singapore have a tax information exchange agreement, but no income tax treaty, so there are no reduced withholding rates.
What is the withholding rate on software royalties paid to a Singapore company?
30% on U.S.-source royalties, meaning royalties for use of the software in the United States. There is no treaty rate.
Do we withhold on a Singapore consultant working remotely?
No. Services performed outside the United States are foreign-source income. Keep a W-8BEN or W-8BEN-E on file.