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Singapore-Malaysia Double Tax Treaty

Updated on Thursday 19th May 2016

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Singapore-Malaysia-Double-Tax-TreatySingapore-Malaysia double taxation agreement

Singapore has signed a double taxation agreement with Malaysia based on the two countries strong economic ties. Considering the trade relations between the two countries and the fact that most of the Singapore workforce is constituted by Malaysian citizens, the double tax treaty has a significant impact on the economies of the two states. Singapore has signed its first double taxation agreement with Malaysia in 1968. The agreement was renewed in 2005 and enforced in 2007 in both countries.

The Singapore-Malaysia double tax treaty applies to persons residing in one or both countries. The term “person” covers both natural persons, such as individual, but also corporate persons, such as Malaysian and Singapore companies. The double taxation agreement applies on all the taxes imposed on the income of a person on behalf of the other signatory state. The agreement covers the taxes imposed on the total income on a person, or separately on certain elements of the income.

Taxes covered by the Singapore-Malaysia double tax treaty

In the case of Malaysia the double taxation agreement covers the following:

  • - the income tax,
  • - the petroleum tax.

In the case of Singapore, it covers the income tax. With respect to elements of the total income, the Singapore-Malaysia double taxation agreement covers the following taxes:

  • - the Malaysian and Singapore dividend tax,
  • - the interest and royalties taxes,
  • - technical fees,
  • - capital gains tax,
  • - taxes applied on employment.

For more information about the taxation of income, you may also contact our specialists in Singapore.

Tax rates according to the Singapore-Malaysia double tax treaty

The double taxation agreement Singapore signed with Malaysia contains several specific provisions with respect to the taxation of dividends, interests and royalties. The tax rates applied in case of Malaysian and Singapore companies paying dividends are:

  • - 5% in case the recipient holds at least 25% of the voting powers in the company paying the dividends,
  • - 10% in all other cases.

Interests are taxed with 10% under the Singapore-Malaysia double tax treaty, while royalties are taxed with 8%. Technical fees are taxed with 5% under the treaty, but a 17% tax rate is applied in case of Singapore companies operating in Malaysia.

For complete information about the provisions of the double tax treaty with Malaysia you may refer to our agents in Singapore.

 

 

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