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Singapore Double Tax Treaties Guide

singapore_Double_Tax_Treaties

Singapore double tax treaties involving more than 70 countries as trading partners protect individuals and companies from double taxation to some extent. Income earned through cross-border transactions is not taxed twice. Double tax treaties help in free movement of capital.

The impact of globalization has been palpable with a tremendous increase in international trade and commerce. This has also resulted in a steep rise in the human capital movement across the borders for the sake of earning income. However, when such a situation arises, there is genuine fear of the people’s income being taxed by more than one country. Such taxation is termed as double taxation.

Double taxation is a serious threat to the very concept of globalization and cross-border transactions which therefore compels countries across the globe to make certain alterations to their respective tax systems. In order to avoid the same chargeable income being taxed by two or more than two countries, governments of various countries have entered into double tax treaties or double tax agreements (DTA) with one another.

Singapore, which is a business and finance hub of the world, also protects its citizens from the adverse effects of double taxation by entering into DTAs with over 70 countries. So, let us take a sneak-peak into the various types of income that come under DTA and the methods to avoid being taxed by more than one country on the same taxable income.

Kinds of Income Which Come Under Double Tax Treaties

1Business profits;9Students and trainees;
2Income from air and shipping transport;10Artists;
3Income from immovable properties;11Sportspersons;
4Interest;12Independent personal services;
5Dividends;13Dependent personal services;
6Royalties & fees paid for offering technical services;14Remuneration & pension with respect to government service;
7Associated enterprises;15Non-government pensions and annuities;
8Capital gains;16Income of government; and
9Teachers and researchers;17Other income.

Purpose of Double Tax Agreement (DTA)

  • A double tax agreement (DTA) clearly states the taxing right of every country.
  • It defines the jurisdictional authority on cross-border transactions, which in turn helps you avoid double tax.
  • DTA permits you to claim for relief on the tax paid on foreign soil.
  • It helps in the prevention of International tax evasion.

How to Avoid Double Taxation?

Broadly, there are two ways by which you can avoid the menace of double taxation. They are:

  • Tax Exemption: If your resident nation agrees to exempt the foreign-sourced income from domestic tax, either completely or partially.
  • Tax Credit: If your resident nation agrees to offer you credit on the tax paid on foreign soil.

SBS Consulting with its expert team of tax consultants offers you services related to the avoidance of double taxation with an extensive guidance on DTA. With our range of Singapore taxation services, we promise you to meet all your tax compliant matters in a professional and timely manner.

Please feel free to contact us on +65 6536 0036 or drop in an email at info@sbsgroup.com.sg

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