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Double Tax Treaties

Double-Tax-Treaties

Of all the Singapore tax treaties, the nation’s double tax agreements with over 70 countries has given a huge boost to the businesses of Singapore who are unduly burdened with payment of tax to two or more countries. The Singapore double tax treaty policy has further strengthened the nation’s trade potential.

The rapid development in International trade and the emergence of multinational companies has made it imperative to review the double taxation laws. Double taxation is defined as the circumstances in which the same tax payer has to pay tax to two or more countries on the same taxable income. Therefore, in order to relieve the burden of double taxation from the taxpayers, Singapore has also entered into the Double Tax Agreement (DTA) or double tax treaty with several countries.

Advantages of Double Tax Agreement (DTA)

  1. Defines the jurisdictional authority on cross-border transactions.
  2. Clearly states the taxing right of every country.
  3. Prevention of international tax evasion by sanctioning the exchange of information between the tax authorities of the contracting countries.
  4. Enables you to claim for relief on tax paid overseas.

Types of Income Covered Under Double Tax Agreement (DTA)

  • Business profits;
  • Air and shipping transport;
  • Income from immovable property;
  • Interest;
  • Dividends;
  • Capital gains;
  • Teachers and researchers;
  • Students and trainees;
  • Artists and sportspersons;
  • Associated enterprises;
  • Royalties and fees for technical services;
  • Independent personal services;
  • Dependent personal services;
  • Remuneration and pension,  vis a vis government service;
  • Non-government pensions and annuities;
  • Income of government; and
  • Other income.

Ways to Avoid Double Taxation in Singapore

  1. Tax Exemption: When the foreign income is exempted from the domestic tax, which may be a part or entirety of the foreign income.
  2. Tax Credit: If a foreign country levies tax on a taxpayer against the domestic tax imposed on the same income of the taxpayer, then a foreign tax credit is provided to the taxpayer, which is normally restricted to the lower of the payable or paid in the foreign and the home country.

Singaporeaccounts.com provides you an in-depth information and guidance on the benefits associated with double tax treaties. Also, we guide you through the methods in order to avoid double taxation, which will inevitably relieve your burden.

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

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