Problem -
In 2016, DEF Consultancy SdnBhd ("DEF"), a company incorporated and resident in Malaysia, was engaged by XYZ Singapore Pte Ltd ("XYZ") to conduct a Malaysia GST training for XYZ's employees. You may find the following information relevant:
- A physical training was conducted by DEF in Singapore on 31 July 2016. An invoice of S$80,000 was issued by DEF on 15 August 2016 and the payment was settled by XYZ on 31 August 2016.
- A follow-up online consultation was carried out by DEF for XYZ's employees on 10 October 2016. An invoice of S$20,000 was issued by DEF on 31 October 2016 and the payment was settled by XYZ on 15 November 2016.
- A further follow-up consultation was carried out by DEF for XYZ's employees in the latter's Singapore office on 12 December 2016. An invoice of $10,000 was issued by DEF on 16 December 2016 and the payment was settled by XYZ on 1 February 2017.
You have also discovered that Mary Wong, the tax accountant of XYZ, was not familiar with the Singapore withholding tax provisions and no taxes were deducted and remitted to the Comptroller of Income Tax on any of the above payments.
Illustrate your understanding of the application of the Singapore withholding tax provisions in respect of the above payments and help Mary Wong formulate the Singapore withholding tax implications for further evaluation by stating clearly the following:
- Whether the payment is subject to withholding tax and the basis in support of your claim.
- The applicable withholding tax rate.
- The amount of withholding tax to be deducted and remitted to the Comptroller of Income Tax.
- The due date for notifying the Comptroller of Income Tax of the withholding tax deduction and the payment of withholding tax.
- Where applicable, the amount of penalty to be imposed by the Comptroller of Income Tax for non-compliance with the withholding tax provisions, assuming that Mary has finally complied with the withholding tax provisions on 17 March 2017.