A DBA is an agreement between two countries that aims to avoid double taxation of taxpayers` income that can flow between the two countries. Since foreign income transferred to Singapore is no longer taxable for individuals, double taxation (under tax treaties) or unilateral tax credits (provided for by national tax legislation) is no longer relevant. The increasing integration of economies around the world has led to an increase in cross-border revenue flows. Due to a conflicting tax policy between countries, this can result in double taxation of certain types of income. Singapore not only ensures that such double taxation does not occur when a company operates from Singapore or with Singapore, but it goes further by explicitly exempting from taxation in Singapore all income from foreign sources in a Singapore company, provided it meets certain criteria. In most cases, it is easy to qualify for this exception. But in the unlikely situation where your company`s foreign income is not being honored, Singapore`s double taxation conventions or unilateral tax credits will ensure that you do not pay taxes on those income. The cancellation of double taxation conventions is intended to eliminate this unfair penalty and encourage cross-border trade. If you are doing business with (or since) Singapore of a DTA country, it is unlikely that you will face double taxation. In addition, Singapore also grants unilateral tax credits to its resident companies in the event of double taxation by countries where Singapore does not have a DBA. It is therefore unlikely that a Singapore-based company will face double taxation. The following themes are discussed: To understand how a DBA works, we must first learn what can be taxed in double taxation. Double taxation is due to the fact that tax rules can vary from country to country: the limited tax treaty between Singapore and Hong Kong provides that the abolition of double taxation is as follows: in most contracts concluded by Hong Kong, double taxation is abolished by the abatement of a tax credit.
Revenues from the Singapore-Hong Kong restricted tax treaty relate to revenues from aircraft and shipping companies. Income from one of these activities is tax-exempt in both states parties. For more information on this topic, please contact our consultants who can also help you open a business in Singapore. In Singapore`s list of tax treaties, you will know if your country has a tax agreement with Singapore and to know the specific provisions of this DBA. The Singapore-Hong Kong Limited Taxation Agreement applies to both individuals and companies established in one or both contracting states. The convention stipulates that residence on the basis of registration for tax purposes in Singapore or Hong Kong. Other similar taxes are also covered by the agreement. In addition, any changes to the tax system of the contracting states are notified to the other party if the amendment somehow relates to the provisions of the limited-tax financial agreement. Our team of founding agents can help Hong Kong investors open a business in Singapore.
If you or your company meets the residency requirements mentioned above, you can use the provisions of a Singapore DTA with Singapore as a state of residence. Note that even if there is no DBA between Singapore and another country with which you do business, you may still be able to avoid double taxation by using Singapore`s unilateral tax credits for Singapore residents.