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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 when creating transactions.

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 in the top right corner.
Select Taxes under Taxes and Compliance.
Navigate to Withholding Tax Settings.
Click Enable Withholding Tax.
You can select if you want to Enable Withholding Tax For Customers and Vendors, Vendors or Customers.
You can enable 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.
You can enable the Enable Withholding Tax Override for purchases transactions option if you want to withhold tax on purchase 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.

Enable Withholding Tax for Customers or Vendors

To create and enable withholding tax for a customer:

Go to Sales on the left sidebar and select Customers.
Click + New in the top right corner of the page.
Enter all the required and mandatory details on the New Customer page.
In the Other Details section, check the Enable Withholding Tax for this Customer option.
Click Save.

Withholding tax will now be enabled for this customer.

To create and enable withholding tax for a vendor:

Go to Purchases on the left sidebar and select Vendors.
Click **+ New **in the top right corner of the page.
Enter all the required and mandatory details on the New Vendor page.
In the Other Details section:
- Check the Enable Withholding Tax for this Vendor option.
- Select the required Withholding Tax Rate (%).

Note: The Withholding Tax Rate you select here will be auto-populated in the bills of the vendor.

Click Save.

Withholding tax will now be enabled for this vendor.

Create Transactions and Record Payments

You can create invoices and deduct withholding tax on them. Here’s how:

Go to Sales on the left sidebar and select 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 or vendor.

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.

Similarly, you can create bills for your vendors and deduct withholding tax.

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.