On 16 March 2016, the Second Protocol amending the standing Agreement for the avoidance of double taxation (DTA) between Singapore and the United Arab Emirates came into force. Its provisions will take effect from 1 January 2017.
The revised terms include longer threshold periods to ascertain the presence of a permanent establishment and lower withholding tax rates for dividends and interest income.
The revised rates under the treaty are as follows:
- Dividends – 0% from 5%. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State shall be taxable only in that other State. This does not affect the taxation of the company in respect of the profits out of which the dividends are paid. “Dividends” as used in the Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.
- Interest income – 0% from 7%. Interest arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State. “Interest” as used in the Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures including premiums and prizes attaching to such securities, bonds or debentures, as well as income assimilated to income from money lent by the taxation law of the State in which the income arises, including interest on deferred payment sales. Penalty charges for late payment shall not be regarded as interest for the purpose of the Article.
The original DTA was signed on 1 December 1995.
Nowadays, Singapore is one of the most attractive options for foreign investors, since it has an extensive network of DTA with more than 70 countries across the globe.