Singapore Signs Tax And Investment Deals With Eastern European States

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

19 September 2006

The government of Singapore has signed a double taxation avoidance agreement with Estonia and an Investment Guarantee Agreement with Ukraine.

The DTAA was signed on Monday by Singapore's Minister for Education and Second Minister of Finance, Tharman Shanmugaratnam, and Estonia's Minister of Finance, Aivar Soerd.

Like other double tax agreements, the treaty aims to alleviate the double taxation of income earned in one country by residents of the other. It also clarifies the taxing rights between Singapore and Estonia for all forms of income arising from cross-border economic activities between the two countries. There are additional provisions to reduce or exempt certain types of income and facilitate the cross-border flow of trade, investment, financial activities and technical know-how between Singapore and Estonia.

The Agreement will enter into force once ratified by both countries and will apply to income arising in the year after it becomes effective.

Meanwhile, Singapore finalised an Investment Guarantee Agreement with Ukraine, which was signed on the sidelines of the World Bank/IMF meeting on Monday by Ukraine's Minister of Economy, Volodymyr Makukha, and Singapore's Minister for Trade and Industry, Lim Hng Kiang.

The key provisions of the agreement include: most favoured nation treatment to be accorded to investments; freely convertible and transferable compensation in the event of expropriation and nationalisation; and referral of investment disputes that cannot be settled to the International Centre for Settlement of Investment Disputes.

"The IGA demonstrates the growing bilateral economic relations between the two countries," the Singapore government stated, continuing:

"It also augurs well for the business communities, as it will lay a solid framework where investors from Ukraine and Singapore can benefit from greater certainty in clearly set out investment norms and protection when investing in the other country."

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