Tag: Double Taxation Agreements

Protocol to DTA signed between Singapore and India: Phasing out of capital gains tax exemption on share-market investments originating from Singapore

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

13 January 2017

On 30 December 2016, Singapore and India signed a Protocol to amend the existing Singapore – India Avoidance of Double Taxation Agreement (DTA) to gradually phase out the capital gains tax exemption on shares from 1 April 2017.

As the India-Mauritius DTA will phase out capital gains tax exemption, the Singapore-India DTA which is pegged to the India-Mauritius DTA, has to be similarly amended.

Hence, the tax treatment for gains on shares acquired on or after 1 April 2017 is as follows:

A. For gains that arise during 1 April 2017 to 31 March 2019:

  • Tax rate imposed on such gains will be limited to 50% of the tax rate applicable on such gains in the State in which the company whose shares are alienated is resident.
  • Subject to specified conditions including expenditure on operations of the alienator in its residence State of at least S$200,000 in Singapore or Indian Rs5,000,000 in India, as the case may be, for the immediately preceding period of 12 months from the date on which the gains arise.

B. Gains that arise after 31 March 2019 will be taxable in the State in which the company whose shares are alienated is resident.

For shares acquired before 1 April 2017, there is no change to the existing tax treatment on gains arising from the alienation of such shares, i.e.

  • Remain taxable only in the residence State of the alienator.
  • Subject to specified conditions including expenditure on operations of the alienator in its residence State of at least S$200,000 in Singapore or Indian Rs5,000,000 in India, as the case may be, for each of the 12-month periods in the immediately preceding period of 24 months from the date on which the gains arise.

The Protocol also updates Article 9 on Associated Enterprises to provide for both countries to enter into bilateral discussions for elimination of double taxation arising from transfer pricing or pricing of related party transactions.

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.

The original DTA was signed on 24 January 1994.

Source: IRAS and Ministry of Finance

Singapore and Ethiopia sign tax treaty

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

28 August 2016

Singapore and Ethiopia signed an Agreement for the Avoidance of Double Taxation (DTA) on 24 August 2016. The DTA includes the internationally agreed Standard for the exchange of information for tax purposes.

The withholding tax rates under the treaty are as follows:

  • Dividends — 5%.  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 between the relevant government authorities of the contracting states.
  • 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 (IRAS)

Singapore’s DTA with France comes into force

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

1 July 2016

Singapore and France’s revised Agreement for the Avoidance of Double Taxation (DTA) came into force on 1 June 2016, and will take effect from 1 January 2017.

Amongst the changes to enhance trade flows are lower withholding tax rates for dividends and anti-abuse provisions. The withholding tax rates under the treaty are as follows:

  • Dividends — 5% of the gross amount of the dividends if the beneficial owner is a company which owns directly or indirectly at least 10% of the share capital of the company paying the dividends; 15% in all other cases. However, since Singapore’s domestic withholding rate for dividends is nil, dividends will be exempt from withholding tax in Singapore.
  • Interest — 10%.
  • Royalties – 0%.

The full text of the DTA is available on the IRAS website.

Source: Inland Revenue Authority of Singapore (IRAS)

Singapore’s DTA with Luxembourg enters into force on 28 December 2015

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

7 January 2016

The Avoidance of Double Taxation (DTA) agreement between Singapore and Luxembourg has come into effect on 28 December 2015 and will take effect from 1 January 2016.

The DTA signed on 9 October 2013 includes the internationally agreed Standard for the exchange of information for tax purposes, and provides greater clarity on taxing rights and minimises the scope of double taxation between the two nations.

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

  • Dividends —

(a) 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends;

(b) 10% of the gross amount of the dividends in all other cases.

  • Interest — 10%.  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 full text of the DTA is available on the IRAS website.

Source: IRAS

Singapore’s DTA with Ecuador enter into force on 18 December 2015

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

23 December 2015

The Avoidance of Double Taxation (DTA) agreement between Singapore and Equador was gazetted on 18 December 2015 and will take effect from 1 January 2016.

The DTA signed on 27 June 2013 includes the internationally agreed Standard for the exchange of information for tax purposes, and provides greater clarity on taxing rights and minimises the scope of double taxation between the two nations.

The withholding tax rates under the treaty are as follows:

  • Dividends — 5%. 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. Since Singapore’s domestic withholding rate for dividends is nil, dividends will be exempt from withholding tax in Singapore.
  • Interest — 10%. Exempted from tax if paid between the relevant government authorities of the contracting states.
  • Royalties — 10%.

The full text of the Protocol to the DTA is available on the IRAS website.

Source: Inland Revenue Authority of Singapore (IRAS)