1 January 2013

On 27 December 2012, the Second Protocol amending the standing Agreement for the avoidance of double taxation (DTA) between Singapore and the United Kingdom came into force.

The Second Protocol provides for lower withholding tax rates for interest, dividend and royalty incomes, and updates the article on Permanent Establishment, compared to the existing DTA. The rates under the treaty are as follows:

• 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 so 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 was signed on 15 February 2012.

Source: Inland Revenue Authority of Singapore and Government Gazette