If you run a Singapore tech company, check your last few payments from overseas customers. If 10–15% is missing, your customer has probably deducted withholding tax. In many cases, that tax was never due.
Singapore’s network of double tax agreements (DTAs) is one of the best reasons to base a regional business here. Used properly, it means many of your customers can pay you in full.
The cause is rarely the law. It is paperwork that was never sent. The right moment to fix this is before your first invoice goes out to a new overseas customer.
Why it happens: your customer carries the risk
In most of the region, the customer paying you is responsible for withholding tax. If they withhold too little, the shortfall and penalties are their problem, not yours. So without clear documents in hand, their finance team takes the safe route and deducts tax at the domestic rate.
Once the money is withheld, getting it back is slow. You may need to file a refund claim with a foreign tax authority, in its language and on its timetable. A Singapore foreign tax credit may not help either: it is limited, and generally only available where the tax was properly due under the treaty.
The lesson is simple. Give your customer the documents that let them pay you in full, before they pay you for the first time.
Business profits or royalties? It depends on what you sell
Under most DTAs, business profits earned by a Singapore company are taxable only in Singapore, unless the company has a permanent establishment (PE) in the customer’s country. Royalties are different: the customer’s country can usually still withhold tax, though often at a reduced treaty rate.
For tech companies, the question is which category your fees fall into. The answer depends on the source country’s view, and the region does not agree on one approach.
Thailand shows how this is changing. For years, the Thai Revenue Department treated payments for application software as royalties, subject to 15% withholding before treaty relief (Legal500). In March 2025, it issued ruling Gor.Kor.0702/1626, which looks at the rights actually granted. Paying for access to hosted software, without any right to exploit the copyright, was treated as service income. With no PE in Thailand, no Thai withholding applied (Forvis Mazars; Alvarez & Marsal).
In practice:
- SaaS and hosted access now has a strong case for business profits in Thailand.
- On-premise licences, or anything granting rights to exploit the software, may still be treated as royalties.
- Other countries in the region (India, Indonesia, Vietnam, the Philippines and others) each have their own position, so check before you invoice.
How your contract describes what you sell matters. A SaaS agreement that reads like a copyright licence invites a royalty classification.
What to send before your first invoice
Say your Singapore company has just signed its first Thai customer. Before the first invoice goes out, send the customer’s finance team:
- A Certificate of Residence (COR) from IRAS, issued for the Singapore–Thailand treaty. A COR is issued for a specific treaty country and a specific year, so plan to renew it.
- A declaration of no permanent establishment, signed by your company’s director, confirming you have no office, staff or dependent agent in Thailand.
- Any country-specific forms. Thailand requires the documents to reach the Revenue Department through the Thai payer before payment, using its DTR form; otherwise the domestic rate applies even where a treaty exists (ASEAN Briefing). India, Indonesia and the Philippines have their own forms too.
The COR and the no-PE declaration are the core everywhere. Country-specific forms are what trip companies up, so check them for each new market.
Residency is about where you are really managed
None of this works without a COR, and IRAS issues one only when your company is controlled and managed in Singapore. That means where your board actually makes its strategic decisions. A Singapore address or a nominee director alone does not establish it.
Foreign tax authorities are asking the same question more often. Many modern treaties now include a principal purpose test, which can deny treaty benefits to companies that look like conduits. A Singapore company with a real director, real board meetings and real decisions made here is in a far stronger position.
In practice, that means:
- At least one active director based in Singapore
- Board meetings held in Singapore, with key decisions minuted
- Records that show the company is run from here, not just registered here
How Futurebooks helps
Futurebooks has supported companies in Singapore since 2010. For tech businesses selling across the region, we handle the full chain:
- Executive Directorship. An experienced Futurebooks director joins your board as an active, Singapore-based compliance director, employed and paid by your company. This is real substance, not a nominee arrangement.
- Board support. As your company secretary, we help you hold board meetings in Singapore and keep the minutes that show where decisions are made.
- Certificates of Residence. We apply to IRAS for your COR for each treaty country you sell into, and renew it every year.
- No-PE declarations and treaty forms. We draft the no-PE declaration for your director to sign for each customer country, and flag any country-specific forms your customers will need.
About to invoice your first overseas customer? Talk to us before you send it. Call 6221 2440 or get in touch.
This article is general information, not tax advice. Treaty treatment depends on your contracts, your customers’ countries and the facts of your business.