Double Taxation Agreements (DTAs) in Singapore presented by Chris Devonshire-Ellis
Country of Origin: Great Britain
Office: Singapore Office
1. What are DTAs and how do they impact doing business in Singapore?
- Double taxation agreements limit or eliminate entities from being taxed on the same income or capital by two different tax jurisdictions.
- Singapore has over 70 comprehensive DTAs in force, applicable to both income and capital, making it an ideal jurisdiction for basing holding company operations.
- With its overwhelmingly favorable tax and legal systems and its position as destination to access ASEAN and other Asian markets, Singapore is among the most business- and investor-friendly country in the world.
2. Who is qualified to take advantage of the DTAs?
- Only residents of Singapore or its treaty partners (which includes, China, India and all members of ASEAN except Laos and Cambodia, among others) can take advantage of the benefits available under the relevant DTAs. Entities can obtain a Certificate of Residence (COR) from the Inland Revenue Authority of Singapore (IRAS). To obtain a COR, the control and management of the company’s business must be exercised in Singapore.
- Factors considered by the IRAS also include: Whether Board of Director’s meetings are held in Singapore; The presence of other related companies in Singapore; The presence of at least one executive director or key employee in Singapore
3. How to get the reliefs under DTAs?
- Relief is granted using two methods: the credit method and the exemption method
- Credit Method: Singapore will grant Foreign Tax Credits to entities that have paid taxes on income derived in the source state. The entity can offset its tax liabilities in Singapore using these credits.
- Exemption Method: The entity has already paid its taxes in the source state will be exempt from paying tax in Singapore altogether.