Press Releases

In line with the reduction in corporate tax rate to 22% announced by the Minister for Finance in his Budget Statement on 3 May 2002, the tax rate under the Income Tax Act for non-residents and certain payments, which is presently pegged at 24.5%, will be correspondingly reduced to 22% with effect from Year of Assessment 2003. This change will apply as follows:

• (a) Non-Resident Tax Rate
  At present, non-residents are required to pay tax on their chargeable income at the rate of 24.5%. This rate will be reduced to 22%.
• (b) Withholding Tax Rate
  Currently, certain payments to non-residents are subject to withholding tax at the rate of 24.5% or 15%. Such payments include interest, royalties, rents for movable property and directors' fees. The withholding tax rate of 24.5% will be reduced to 22%. The withholding tax rate of 15%, which is generally applicable to interest, royalties and rents for movable property payable to non-resident who does not carry out operations in and from Singapore, will remain unchanged.
• (c) Tax Rate for Trustees and Executors
  A trustee (other than the trustee of an incapacitated person) and an executor are currently taxed at the rate of 24.5% on the income of the trust and estate respectively. This rate will be reduced to 22%.
• (d) Deduction of Tax from Dividends
  Every company which is resident in Singapore is required to deduct tax from the amount of any dividend paid to its shareholders. A resident company paying dividends may utilise the tax which it has paid on its corporate profits towards payment of the deduction required. If the corporate tax paid equals or exceeds the amount of tax which is to be deducted from the dividend, no further payment from the company is needed. This rate of tax deduction from dividends will be 22% for dividends paid on or after 1 Jan 2002.
• (e) Tax Rate for Bodies of Persons
  Bodies of persons e.g. societies, clubs and associations, are taxed under Part B of the Second Schedule of the Income Tax Act. The tax rates range from 6% for the first $2,500 of chargeable income to 55% for chargeable income in excess of $100,000. To ensure that bodies of persons who are taxed under this Schedule need not pay tax at a rate higher than companies, the highest effective rate of tax imposed under this Schedule is capped at the effective company tax rate. The effective company tax rate in relation to a body of persons, is the effective rate of tax on its income if it were to be taxed as a company.

MINISTRY OF FINANCE