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Guernsey, Singapore DTA Comes Into Effect

by Mary Swire, Tax-news.com, Hong Kong
02 December, 2013

The double taxation agreement (DTA) between Singapore and Guernsey, which was signed on February 6 this year and incorporates the internationally-agreed standard for the exchange of information for tax purposes, entered into force on November 26.

Among other provisions, the DTA sets out permanent establishment rules and applies to income tax in both Singapore and Guernsey. It provides for a zero withholding tax rate for dividends, and for a maximum 12 percent and 8 percent withholding tax to be imposed on interest payments and royalties, respectively.

The profits of an enterprise of a country will only be taxable in that state, unless the enterprise carries on business in the other country through a permanent establishment, and profits from the operation of ships or aircraft in international traffic will be taxable only in the country of residence.

The DTA also gives the tax authorities of both countries a greater ability to exchange taxpayer information. It also provides that a tax authority cannot refuse to provide information solely because it does not require the information for its own domestic purposes, or because the information is held by a bank or similar institution.

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