Singapore – China Double Taxation Treaty

Singapore has signed until now 76 double taxation treaties, one of them being signed with China. The latest Singapore- China double taxation agreement (DTA) was signed on 11th of July 2007 and came into force few months later, in September 2007. The agreement replaced a previous treaty, signed in 1986. If you represent a company in any of the two countries, our law firm in Singapore can offer you more information on the provisions of the treaty. 

The negotiations between the two countries have led to improvements in terms of corporate taxation and have also facilitated trade, investments and financial activities between Singapore and China. Our attorneys in Singapore can present to you the provisions of the new ratified DTA, but you should know that the most important tax modifications, advantageous for companies in Singapore and in China, are the following:

 

• the withholding tax on dividends for corporate shareholders owning at least 25% of the share capital was reduced from a rate of 7% to 5%;

• the withholding tax on dividends for the other shareholders of the company was reduced from 12% to 10%;

• royalties also received a tax reduction on payments on industrial, commercial and scientific equipment; the tax was reduced from 10% to 6%; 

The 2007 DTA applies on taxes on income through the competent authorities of each country. State Administration of Taxation represents China, while Singapore has nominated as a representative the Ministry of Finance. 

 

The Agreement is applicable in China to the individual income tax and the enterprise income tax, and in Singapore only on the income tax. 

 

The profits of a company in a contracting state will be taxed only in that state. An exception applies in the situation in which the company has in the other contracting state a permanent establishment. A permanent establishment, under the Singapore – China DTA, signifies a fixed place in which a business carries on its activity, or a building site, construction or assembly where activities last longer than 6 months or furnishing of services carried out through personnel for periods between 6 -12 months (Article 5). Our attorneys in Singapore can offer you further information on this topic. 

 

If you are interested in further information on the Singapore –China Double Taxation Treaty, please contact our law firm in Singapore, who can provide consultation and legal representation.