14 October 2013

Singapore and Luxembourg signed a revised Agreement for the Avoidance of Double Taxation (DTA) on 9 October 2013.

Amongst the changes are lower withholding tax rates for dividends, interest and royalties, longer period test for determining permanent establishments, a more mutually favourable tax treatment for international air transport and shipping income, and incorporation of the internationally agreed Standard for the exchange of information for tax purposes.

The revised withholding tax rates under the treaty are as follows:

• Dividends — Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State shall be taxable only in that other State. However, this shall not affect the taxation of the company in respect of profits out of which the dividends are paid.
• Interest — Interest paid by a resident of a Contracting State to a resident of the other Contracting State shall be taxable only in that other State.
• Royalties — 7%.

The DTA has yet to be ratified and therefore does not have the force of law. The full text of the DTA is available on the IRAS website.

Source: Inland Revenue Authority of Singapore