An overview of the comprehensive bilateral tax treaty between Singapore and India for the avoidance of double taxation of income. To learn more, click here. The information on this page may be affected by the coronavirus relief for pension plans and IRAs. Tax treaties allow you to be exempt from double taxation, whether through tax credits, tax exemptions or reduced withholding rates. These facilities vary from country to country and depend on the respective income positions. Learn more about Singapore`s double taxation treaty. The double taxation system for internationalization allows companies that expand abroad to claim a double deduction for eligible expenses for certain market expansion and investment development activities. This includes costs of qualified personnel incurred between 1 July 2015 and 31 July 2015. December 2025 when Singaporeans or permanent residents of Singapore are seconded to foreign institutions.

The development of international trade and multinational corporations has increased the need to address the issue of double taxation. As a company or individual looking beyond your own country for business opportunities and investments, you would naturally face the issue of taxation, especially if you have to pay taxes twice on the same income in the host country as well as in your home country. Therefore, you would try to structure your business operations to optimize your tax situation and thus reduce costs, which would increase your global competitiveness. This is where the relevance of DTAs or Singapore tax treaties comes into play. A DTR is the facilitation provided for in a double taxation agreement (DTA) to reduce double taxation in the form of a tax credit. It allows the Singapore resident tax holder to claim a credit for the amount of tax paid in the foreign jurisdiction against Singapore tax payable on the same income. A DTR is granted if the foreign tax is paid in accordance with the regulations of the DTA and is limited to the lower amount of foreign tax paid and Singapore tax that would have been payable on the same income. A tax credit is granted for foreign tax that a taxpayer levies on the same income in exchange for his or her domestic tax. The amount of the tax credit is generally limited to the lower amount of the amounts paid/payable in the country of origin and origin.

This is called the ordinary method of credit over the full credit method, where the tax paid in the home country is allowed as a full loan. Tax credits are commonly referred to as double taxation relief (« DTR ») in Singapore. The DTR application must be requested when filing the annual income tax return (Form C) and must be reported in the calculation of the corporation`s tax. Evidence (for example. B, withholding tax receipts, letters from the foreign tax administration or dividend receipts) proving that the transferred income was taxed in the contractual country are required before DTR applications can be considered. In this form of relief, income is taxed at a lower rate and applies to the following income classes: interest, dividends, royalties and profits from international and air shipping. As part of the development and expansion incentive, companies that carry out new projects with high added value, develop or improve their business activities or carry out incremental activities after their pioneering period can request that their profits be taxed at a reduced rate of at least 5% for an initial period of up to ten years. The total period of tax relief for each eligible project or activity is subject to a maximum of 40 years (including the relief period previously granted after the pioneer, if applicable). If you receive foreign income from a Contracting State, you are entitled to relief under the relevant tax treaty by presenting a certificate of residence abroad. This is proof of your tax residency in Singapore. On the other hand, if you are a tax resident of a contracting country, you must submit to the Inland Revenue Authority of Singapore a duly completed certificate of residence of non-residents (application for exemption from Singapore income tax avoiding the double taxation treaty), which is duly certified by the tax authority of the contracting country. Methods of reducing double taxation are defined either in a country`s national tax legislation or in the tax treaty.

The methods available in Singapore are as follows: Foreign income earned by your business in Singapore can be taxed twice – once in the foreign jurisdiction and a second time when the foreign income is transferred to Singapore. There are 2 types of foreign tax credits that your business can benefit from in Singapore to mitigate the double taxation suffered. Depending on your adjusted gross income reported on your Series 1040 return, the loan amount is 50%, 20% or 10% of: Under the FSI system, income from certain high-growth, high-value-added activities, such as services and transactions related to the bond market, the derivatives market, to the stock market and the syndication of credit facilities, may be taxed at 5%. while a wider range of financial activities are eligible for a tax rate of 13.5%. .