Second Protocol to the Standing Agreement for the Avoidance of Double Taxation signed between Singapore and UK

On By taxsgIn Corporate Tax, Latest Tax News, Tax Treaties, Withholding Tax

19 February 2012

On 15 February 2012, the Governments of Republic of Singapore and the United Kingdom and Northern Ireland signed a Second Protocol amending the Agreement for the avoidance of double taxation (DTA).

The Second Protocol revises the following terms in the current DTA between the two countries:

  • updating Article 3 (General Definitions), Article 4 (Residence), Article 5 (Permanent Establishment), Article 14 (Independent Personal Services), Article 15 (Dependent Personal Services), Article 18 (Pensions), Article 20 (Student and Trainees), Article 22 (Other Income), Article 23 (Elimination of Double Taxation) and Article 26 (Mutual Agreement Procedure)
  • lowering the withholding tax rates in Article 10 (Dividends), Article 11 (Interest) and Article 12 (Royalties)
  • deleting Article 21 (Teachers), Article 24 (Limitation of Relief) – with no change to the subsequent Article numberings.

The new withholding tax rates are:

  • Dividends  – dividends paid by a company which is a resident of a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in that other Contracting State. However:

a) dividends paid by a real estate investment trust which is a resident of the United Kingdom may also be taxed, according to its laws, in the United Kingdom. However, if the beneficial owner of the dividends is a resident of Singapore, the tax  charged  shall  not  exceed  15%  of  the gross  amount of the dividends;

b) distributions paid by a real estate investment trust which is organised in Singapore may also be taxed, according to its laws, in Singapore.  However, if the beneficial owner of the distributions is a resident of the United Kingdom, the tax so charged shall not exceed  15% of the gross  amount of the distributions.

  • Interest – 5% Exempted from tax if paid between the relevant government authorities of the contracting states.
  • Royalties – 8%.

The protocol will enter into force after its ratification by both countries, and therefore does not have the force of law as yet.

The full text of the Second Protocol is available here.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website.