Updates to Withholding Tax Exemption for Non-Resident Arbitrators and Mediators

18 Feb 2022 Posted in Announcements

1. In 2002, the Government introduced a withholding tax exemption on the income derived by non-resident arbitrators for arbitration work carried out in Singapore, and in 2015, on the income derived by non-resident mediators for mediation work carried out in Singapore. This was part of the Government’s various efforts to strengthen Singapore’s position as an international dispute resolution hub, and grow the sector in Singapore. The tax exemption was due to lapse after 31 March 2022.

2. As part of the Government’s regular review of tax incentives, this tax exemption for non-resident arbitrators and mediators will be extended for one more year, till 31 March 2023.

3. From 1 April 2023 to 31 December 2027, gross income derived by non-resident arbitrators and mediators for arbitration and mediation work carried out in Singapore will be subject to a concessionary withholding tax rate of 10%, subject to conditions. The usual withholding tax rate for non-resident professionals is 15% on the gross income derived¹.

4. As Singapore has a comprehensive network of Avoidance of Double Taxation Agreements (DTAs) with other jurisdictions, for the withholding tax paid in Singapore, most non-resident arbitrators and mediators who carry out arbitration/mediation work in Singapore will generally not be affected by double taxation. For more information on Singapore’s DTAs, please visit IRAS’ website. Non-resident arbitrators and mediators may also check with their respective tax authorities if the relevant DTA provides double taxation relief on the income derived in Singapore or if they qualify for foreign tax credits.

5. Singapore remains committed to support businesses in the resolution of their commercial disputes.
   
   a) We maintain an open regime for the practice of international arbitration and mediation hub, so that businesses can have choice of counsel, arbitrators and mediators. Non-resident arbitrators and mediators will continue to enjoy work pass exemption, i.e., they do not need to apply for a work pass to carry out arbitration and mediation work in Singapore for up to 90 days in a calendar year.
   
   b) We continually review our laws, to keep pace with new developments and meet business needs. For example, we have introduced reforms to provide businesses and other litigants with additional funding options to resolve their disputes. We have allowed third-party funding (TPF) for international arbitration proceedings since 2017, and in 2021, this was extended to domestic arbitration, certain proceedings in the Singapore International Commercial Court (SICC), and related court and mediation proceedings. We recently also introduced a framework for Conditional Fee Agreements, for proceedings aligned with those prescribed under the TPF framework,
   
   c) We offer world-class infrastructure at Maxwell Chambers and Maxwell Chambers Suites, to support international dispute resolution work. Non-resident arbitrators and mediators have access to conducive working space at the dispute resolution complex.

6. We will continue to review our policies to grow the dispute resolution sector in Singapore, and support non-resident arbitrators and mediators in conducting their cases here.

MINISTRY OF LAW
18 FEBRUARY 2022

^{1. A non-resident professional can opt to be taxed on the net income (i.e. gross fee less allowable expenses) at the prevailing non-resident individual tax rate.↩}

Last updated on 18 Feb 2022