(June 12, 2015)
On June 11, 2015 the Inland Revenue Authority of Singapore issued a press release announcing that on June 11, 2015 Singapore and Thailand 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 signed, the DTA has not yet entered into force. For the DTA to enter into force, the respective ratification procedures have to have been finalized in both countries. When entering into force, the newly signed DTA will replace the existing DTA.
Paragraph 3 of Article 5 of the DTA (“PERMANENT ESTABLISHMENT”) states:
“The term “permanent establishment” shall also include:
(a) a building site, a construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities last more than 12 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 where 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.”
Paragraph 5 of Article 5 of the DTA (“PERMANENT ESTABLISHMENT”) furthermore states:
“Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 6 applies - is acting in a Contracting State, on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State in respect of any activities which that person undertakes for the enterprise, if such a person:
(a) has and habitually exercises in the first-mentioned State, an authority to conclude contracts in the name of the enterprise; unless his activities are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or
(b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.”
With respect to withholding taxes on dividends Paragraph 2 of Article 10 of the DTA (“DIVIDENDS”) determines the following:
“However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.”
The DTA also includes an Article 10 (“BRANCH REMITTANCE”) which states the following:
1. Nothing in this Agreement shall be construed as preventing Thailand from imposing tax on the disposal of profits from Thailand in accordance with section 70 bis of the Thai Revenue Code.
2. However, the rate of tax on such disposal of profits shall not exceed 10 per cent of the gross amount.
Paragraph 2 of Article 11 of the DTA (“INTEREST”) states the following:
“However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 10 per cent of the gross amount of the interest if the interest is beneficially owned by any financial institution or insurance company;
(b) 10 per cent of the gross amount of the interest if the interest is beneficially owned by a resident of the other Contracting State and is paid with respect to indebtedness arising as a consequence of a sale on credit by a resident of that other Contracting State of any equipment, merchandise or services, except where the sale was between persons not dealing with each other at arm’s length; and
(c) 15 per cent of the gross amount of the interest in all other cases.”
Paragraph 2 of Article 12 of the DTA (“ROYALTIES”) states the following:
“However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of the royalties if they are made as consideration for the use or the right to use any copyright of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting;
(b) 8 per cent for the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment; and
(c) 10 per cent of the gross amount of the royalties in all other cases.”
Furthermore the new DTA contains an article arranging for a Mutual Agreement Procedure (Article 24) and an article arranging the Exchange of Information (Article 25).
Click here to be forwarded to the text of the Agreement between the Government of the Republic of Singapore and the Government of the Kingdom of Thailand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income.
Are you looking for an other DTA? Then check our section DTAs & TIEAs, a very efficient way to locate numerous DTAs.
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