Certain payments may be subject to a reduced rate of withholding tax, or exempted from withholding tax, pursuant to relief provisions of the Income Tax Act or the Economic Expansion Incentives (Relief from Income Tax) Act (EEIA), or government policy.
On or about 5 Aug 2021, the Ministry of Finance (MOF) has released the Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) Notification 2013 that gives effect to the extension of the withholding tax exemption for payments on over-the-counter financial derivatives announced in the 2021 Budget has been released and came into retrospective effect on 1 April 2021.
The Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) Notification 2013
The amendment notification:
- extends to 31 December 2026 the withholding tax exemption for a payment made by a financial institution to a non-resident person on over-the-counter financial derivatives
- extends the scope of the withholding tax exemption to a payment by the financial institution to a non-resident person who carries on an operation in Singapore through a permanent establishment in Singapore, where the payment is made under a contract for over-the-counter financial derivatives not entered into through that operation.
Source: The Electronic Gazette, 6 August 2021