Moses Lee, Singapore’s Commissioner of Inland Revenue, and Jörg Reding, Switzerland’s Ambassador to Singapore, signed a revised double taxation agreement (DTA) between their two countries in Singapore on February 24, 2011.
The revised DTA will replace the current agreement which dates back to 1975, and incorporates changes that, it is hoped, will further encourage and facilitate cross-border trade and investment between Singapore and Switzerland.
Amongst other provisions, the revised DTA includes the internationally-agreed Organisation for Economic Cooperation and Development’s standard for the exchange of information for tax purposes upon request. The DTA contains the administrative assistance rules that were recommended in mid-February 2011 by the Swiss Federal Council, and which state that identifying the taxpayer and the holder of the information is the indispensable prerequisite for the granting of administrative assistance.
In addition, Switzerland and Singapore have agreed to lower withholding tax rates for dividends and interest. A withholding tax of 5% will be applicable on dividend payments from holdings of at least 10% in the capital of the company making the payment. Dividend payments to the national banks of both of the countries in the agreement will be exempt from withholding tax.
In future, interest payments will be subject to a withholding tax of a maximum of 5%. Interest payments to the national banks of both countries in the agreement, as well as interest payments between banks in Switzerland and Singapore will in future be exempt from withholding tax.
The DTA also changes the period test for determining permanent establishment and thus the liability for taxes, and will enter into force after its ratification by both countries.
The revised DTA will replace the current agreement which dates back to 1975, and incorporates changes that, it is hoped, will further encourage and facilitate cross-border trade and investment between Singapore and Switzerland.
Amongst other provisions, the revised DTA includes the internationally-agreed Organisation for Economic Cooperation and Development’s standard for the exchange of information for tax purposes upon request. The DTA contains the administrative assistance rules that were recommended in mid-February 2011 by the Swiss Federal Council, and which state that identifying the taxpayer and the holder of the information is the indispensable prerequisite for the granting of administrative assistance.
In addition, Switzerland and Singapore have agreed to lower withholding tax rates for dividends and interest. A withholding tax of 5% will be applicable on dividend payments from holdings of at least 10% in the capital of the company making the payment. Dividend payments to the national banks of both of the countries in the agreement will be exempt from withholding tax.
In future, interest payments will be subject to a withholding tax of a maximum of 5%. Interest payments to the national banks of both countries in the agreement, as well as interest payments between banks in Switzerland and Singapore will in future be exempt from withholding tax.
The DTA also changes the period test for determining permanent establishment and thus the liability for taxes, and will enter into force after its ratification by both countries.
