27 February 2014

On 21 February 2014, Singapore and Laos signed an Agreement for the Avoidance of Double Taxation (“DTA”).

The DTA will encourage and facilitate cross-border trade and investment between Singapore and Laos by providing greater clarity on taxing rights and minimising the scope of double taxation between the two countries. Amongst other provisions, the DTA provides for lower withholding tax rates on cross-border payments of dividends, interest and royalties.

The withholding tax rates under the DTA 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 may be taxed in the Contracting State or that other Contracting State. Since Singapore’s domestic withholding rate for dividends is nil, dividends will be exempt from withholding tax in Singapore.
• Interest — 5%. Exempted from tax if paid to the government of the other Contracting State.
• Royalties — 5%.

The DTA is awaiting ratification and 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