Details Of Ratified Singapore-Russia DTA Published

by Mary Swire, Tax-News.com, Hong Kong

12 October 2009

Singapore’s agreement with the Russian Federation for the avoidance of double taxation comes into force on January 16, 2009, following the completion of ratification formalities. The provisions of the Agreement shall apply to income derived on or after January 1, 2010.

The agreement, which is Singapore’s 60th double taxation agreement, encourages and facilitates cross-border trade and investment between Singapore and Russia through the lowering of tax barriers and the better definition of taxing rights between the two nations. The main provisions under the agreement include the following:

• Lower withholding tax rates are imposed on dividends, interest and royalties. The tax rate for interest and royalties is 7.5% while the following rates apply to dividends:
• 5% (for corporate shareholders holding at least 15% of the share capital and who have invested at least USD100,000 or its equivalent in other currencies);
• 5% for the government; and
• 10% (for other shareholders)
• Tax credit would be available for residents earning foreign-sourced income. In the case of dividends received from Russia, Singapore also allows tax credit on the underlying tax paid for the dividends (i.e. tax credit on the corporate tax on the profits out of which the dividends are paid) if there is at least a 10% shareholding.
• A building site, a construction, installation or assembly project, or supervisory activities connected therewith, constitute a permanent establishment only if it lasts more than six months. The period threshold for furnishing of services is more than three months in any 12-month period.

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