Singapore and Sri Lanka revise DTA

7 April 2014

Singapore and Sri Lanka signed a revised Agreement for the Avoidance of Double Taxation (DTA) on 3 April 2014.

Amongst the changes are lower withholding tax rates for dividends and royalties, updates to the provisions for determining permanent establishments, as well as the 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 — 7.5% or 10%. However, since Singapore’s domestic withholding rate for dividends is nil, dividends will be exempt from withholding tax in Singapore.
  • Interest — 10%. Exempted from tax in a Contracting State if the interest arises in the Contracting State and is paid to the government of the other Contracting State. Exempted from tax in the other State if the interest is derived and beneficially owned by a banking or financial institution of a Contracting State.
  • Royalties — 10%.

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 (IRAS)