Singapore and Seychelles Sign Double Tax Agreement
SINGAPORE – The Inland Revenue Authority of Singapore has announced that Singapore and the Seychelles have signed an Agreement for the Avoidance of Double Taxation (DTA) on July 9, 2014. The signing took place in New York earlier this week. The Seychelles is known both as an up market tourist destination, but also as an off-shore financial services and tax haven. The DTA will benefit businesses by lowering the withholding tax rates, and will also allow for the exchange of information for tax purposes between the two countries governmentsw. The DTA will enter into force after ratification by both countries.
Under the DTA:
- Dividends paid by a company which is a resident of one of the countries to a resident of the other will be taxable only in that other country. However, this will not apply if the beneficial owner of the dividends, being a resident of one of the countries, carries on business in the other country of which the company paying the dividends is a resident, through a permanent establishment situated therein.
- Interest arising in one of the countries and paid to a resident of the other may be taxed in that other country. However, such interest may also be taxed in the country in which it arises and according to the laws of that country, but if the beneficial owner of the interest is a resident of the other country, the tax so charged will not exceed 12 percent of the gross amount of the interest.
According to the official agreement, the DTA will have effect in Singapore as follows:
- “In respect of taxes withheld at source, on amounts liable to be paid, deemed paid or paid (whichever is the earliest) on or after 1 January of the calendar year next following the year in which the Agreement enters into force;
- In respect of tax chargeable (other than taxes withheld at source) for any year of assessment beginning on or after 1 January in the second calendar year following the year in which the Agreement enters into force; and
- In respect of Article 25 (Exchange of Information), to requests made on or after the date of entry into force to information for taxes relating to taxable periods beginning on or after 1 January of the calendar year next following the year on which the Agreement enters into force; or where there is no taxable period, for all charges to tax arising on or after 1 January of the calendar year next following the year on which the Agreement enters into force.”
The official Singapore and Seychelles Agreement for Avoidance of Double Taxation can be downloaded here.
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