International trade activities have led to companies opening subsidiaries or other type of legal entities in foreign countries. Singapore is one of the most developed countries in terms trading activities which is why double taxation agreements (DTAs) are an important factor for attracting foreign investors towards the country. The reduction of taxes and the consolidation of Singapore’s position among the most competitive countries in the world are based on international taxation agreements. Double tax agreements are usually concluded among two or more countries in order to reduce the tax burden applied to the same a taxpayer.
Singapore is one of the countries with many double taxation avoidance treaties. Some types of incomes are exempt from taxation or benefit from reduced tax rates in Singapore depending on the type of double tax agreement concluded. Singapore has signed comprehensive and limited double taxation agreements. Comprehensive agreements cover all types of incomes, while limited agreements cover only certain types of incomes.
Among the countries Singapore has singed double tax treaties with there are:
In Singapore both companies and individuals can benefit from tax reliefs or deductions covered by double taxation agreements. The incomes benefitting from deductions or reliefs in Singapore are the income for immovable property, dividends, royalties, interest, business profits, capital gains, profits made from air transportation or shipping. The methods to relieve double tax agreements in Singapore can take the form of tax credits that will be granted to a taxpayer for the foreign tax against the tax imposed in his or her country of origin on the same income. Tax reductions can be offered for taxes paid on dividends, interests and royalties. Tax deductions are offered in Singapore on the foreign tax applied to the foreign income.