Singapore USA Double Tax Treaty
Singapore-USA Double Tax TreatyUpdated on Saturday 14th January 2023
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Double tax agreements in Singapore
Even if each double taxation agreement Singapore has concluded contains its own specific provisions, there are also general principles applicable to all double taxation agreements. The purpose of the double taxation agreements the city-state concluded is limited to Singapore tax residents and the country the treaty was signed with. The taxes covered by the double taxation treaties Singapore signed are the income taxes. All Singapore double taxation treaties including the one with the United States mention permanent establishments. The presence of an US permanent establishment in Singapore will trigger the taxation of the entity in the other country. According to the Singapore-US double taxation treaty, permanent establishments are considered:
- - any place of management in Singapore,
- - branch offices,
- - warehouses and workshops,
- - farms,
- - mines or oil well,
- - construction sites.
With respect to individuals, they are considered to have a permanent establishment in Singapore if they carry any activity within a construction site or have appointed another individual to conduct those actions on their behalf.
What are the taxes covered by the Singapore-USA double taxation treaty?
The double taxation treaty between Singapore and the United States covers the income from immovable property which is taxed in both countries, but the country of residence will grant a credit tax for the tax paid in the other country. Business profits of US companies that do not have permanent establishments in Singapore will not be taxed in Singapore. Dividends may also be taxed in both countries, but a credit tax will be granted in the country where the dividends are paid. However, dividends are not taxed in Singapore. The income from employment will be taxed in Singapore if the services are rendered in the city-state if the employee resides in Singapore for more than 183 days in tax year.
Taxation of corporations according to the Singapore-US double tax agreement
US and Singapore corporations will be exempt from paying the income tax if the following criteria are satisfied:
- - US or Singapore citizens hold more than 50% of the value of the corporation’s stock,
- - the corporation’s stock is traded on recognized securities market or is owned by a company traded on the US or Singapore Stock Exchange.
For complete information about the taxation agreement with the United States, you may contact our law firm in Singapore.