Singapore-UK Double Taxation Treaty

Double taxation treaty between Singapore and the United Kingdom    

Singapore singed its first double taxation agreement with the United Kingdom at the beginning of 1997. The agreement covers the income taxes, the corporate taxes and the capital gains taxes and was enforced gradually in both countries, as it follows:

• - in 1998 for the UK and Singapore income and corporate taxes,
• - in 1999 for the UK and Singapore capital gains taxes.

The double tax treaty was amended once in 2009 with a protocol for the exchange of tax information and once in 2012 when amendments were brought with respect to the capital gains and corporate taxes in Singapore and UK.

Taxation according to the Singapore-UK double taxation agreement

The double taxation agreement contains many advantageous conditions for the elimination of double taxation in both countries. The scope of the agreement applies to both UK and Singapore tax residents. The incomes covered by the double taxation agreement Singapore signed with the UK are taxed as it is follows:

• - income from immovable property is taxed in the country in which the property is located,
• - business profits are taxed in the country where the company has a permanent establishment in,
• - air transport or shipping is taxed in the UK or Singapore companies’ resident countries,
• - employment incomes are taxed in the country where the employee renders his or her work in.

The elimination of double taxation is done by tax credit relief in both Singapore and the United Kingdom.

Tax rates according to the Singapore-UK double tax agreement

The double taxation agreement between Singapore and the United Kingdom provides the following reduced rates for dividends, interests and royalties. Dividends are taxed as it follows:

• - 5% of the gross amount if the beneficial owner is an UK company holding at least 10% of the share capital of a Singapore company paying the dividends,
• - 15% for all other cases.

Dividends are exempt from taxation when paid to non-residents.

Interests and royalties are taxed at 15% if the amount was augmented before the end of 1999 and 10% in all other cases. Both taxes may be levied in Singapore or UK.

For complete information about the provisions of the double tax agreement with the United Kingdom you may contact our Singapore law firm.