On May 20, 2016 the Government of the Republic of Singapore and the Royal Government of Cambodia signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Hereafter: the DTA).

Although the DTA has been signed, it has not entered into force yet. For the DTA to enter into force, the respective ratification procedures have to have been finalized in both countries.

 

Below we will discuss a selection of provisions included in the DTA of which we think they might interest our readers.

 

Taxes covered

Based on Article 2, Paragraph 3 of the DTA (“Taxes Covered”), the existing taxes to which the DTA shall apply are in particular:

(a)   In Cambodia:

(i)     Tax on Profit including Withholding Tax, Additional Profit Tax on Dividend Distribution and Capital Gains Tax;

(ii)   Tax on Salary; and

(b)   In Singapore:

(i)     the Income Tax

 

Article 2, Paragraph 4 subsequently arranges that the DTA shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes.

 

Permanent establishment

Article 5, Paragraph 3 of the DTA (“Permanent Establishment”) arranges that the term “permanent establishment” also encompasses:

(a)   A building site, a construction, assembly or installation project, or supervisory activities in connection therewith, but only if such site, project or activities last more than six months;

(b)   The furnishing of services, including consultancy services, by an enterprise of a Contracting State through employees or other personnel engaged by the enterprise for such purpose, but only if activities of that nature continue (for the same or a connected project) within the other Contracting State for a period or periods aggregating more than 183 days within any twelve-month period; and

(c)   The carrying on of activities (including the operation of substantial equipment) in the other Contracting State for the exploration or for exploitation of natural resources for a period or periods aggregating more than 90 days in any twelve-month period.

 

Article 5, Paragraph 5 of the DTA subsequently arranges that notwithstanding the preceding provisions of Article 5 of the DTA, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom Article 5, Paragraph 7 applies.

 

Immovable property

Article 6, Paragraph 1 of the DTA (“Income from Immovable Property”) arranges that Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

 

With respect to immovable property Article 14, Paragraph 1 of the DTA (“Capital Gains”) arranges that gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 of the DTA and situated in the other Contracting State may be taxed in that other State.

 

Article 14, Paragraph 4 of the DTA arranges that gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.

 

Associated enterprises

Article 9, Paragraph 2 of the DTA (“Associated Enterprises”) contains a so-called appropriate adjustment clause.

 

Dividends

If the beneficial owner of the dividends is a resident of the other Contracting Party, Article 10, Paragraph 2 of the DTA (“Dividends”) maximizes the withholding tax a Source State is allowed to withhold over such dividends to 10 per cent of the gross amount of the dividends.

 

Interest

If the beneficial owner of the interest is a resident of the other Contracting Party, Article 11, Paragraph 2 of the DTA (“Interest”) maximizes the withholding tax a Source State is allowed to withhold over such interest to 10 per cent of the gross amount of the interest.

 

Royalties

If the beneficial owner of the royalties is a resident of the other Contracting Party, Article 12, Paragraph 2 of the DTA (“Royalties”) maximizes the withholding tax a Source State is allowed to withhold over such royalties to 10 per cent of the gross amount of the royalties.

 

Fees for Technical Services

The DTA contains an article containing regulations regarding fees for technical services (Article 13 of the DTA).

 

Article 13, Paragraph 3 of the DTA provides the following definition of fees for technical services:

The term "fees for technical services" means payment of any kind in consideration for the rendering of any managerial, technical or consultancy services, including the provision by the enterprise of the services of technical or other personnel, but does not include payments for services to which Article 15 of this Agreement applies.

 

If the beneficial owner of the fees for technical services is a resident of the other Contracting Party, Article 13, Paragraph 2 of the DTA (“Fees for Technical Services”) maximizes the withholding tax a Source State is allowed to withhold over such fees for technical services to 10 per cent of the gross amount of the fees.

 

Other

Furthermore the DTA contains a.o. provisions regarding a Mutual Agreement Procedure (Article 25) and regarding the Exchange of Information (Article 26).

 

Click here to be forwarded to the text of the DTA as available on the website of the Inland Revenue Authority of Songapore.

 

Are you looking for other DTAs? Then check our section DTAs & TIEAs, a very efficient way to locate numerous DTAs.

 

 

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