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Singapore – Thailand Double Tax Treaty

Singapore – Thailand Double Tax Treaty

Singapore and Thailand have signed a new Double Taxation Agreement (DTA) in June 2015, replacing the previous treaty, signed in 1975. The new agreement has been signed in order to ratify several provisions that were outdated and to improve commercial relationships between the companies of the two states. As an investor interested in opening a company in Singapore, you should know that the latest agreement offers better conditions for businesses, as it had lowered the withholding taxes on interest, dividends and royalties.

Revised Singapore- Thailand DTA

The new agreement signed between Singapore and Thailand aligns with the model tax imposed by the Organisation for Economic Cooperation and Development (OECD). The Agreement hasn’t been ratified yet, as the law in Singapore states that the provisions of the document will be applicable from the 1st January of the next year in which the treaty was signed. If you need more information on the applicable tax law for foreign companies, our specialists in Singapore company formation can offer consultations on this subject.

New Provisions under the Singapore –Thailand Treaty

The latest treaty improved conditions for investors seeking to open a company in Singapore, as many taxes that must be paid by these have been considerably lowered. The most important provisions are the following:

permanent establishment – (PE) the definition has been modified and, according to the new treaty, the threshold for establishing a PE was lengthened from 6 months to 12 months;

the furnishing of services are also considered a permanent establishment as long as the activities of the company in the other contracting state are longer than 183 days in a year period;

the withholding tax on dividends will be reduced from 20% to 10% if the recipient is the beneficial owner of the dividends and a resident in the other contracting state;

the withholding tax on interest will also be modified from 25% to 15% if the recipient is the beneficial owner of the interest and a resident in the other contracting state;

royalties definition has been modified to incorporate the right to use industrial, scientific or commercial equipment; also, the present withholding tax rate on royalties (15%) will be reduced to 5%, 8% or 10%; our specialists can offer you more details on the new taxes on royalties will be applied.

If you want to open a company in Singapore and you want to know more information about the applicable law under the new Singapore – Thailand double taxation treaty, please contact our consultants in company formation, who can offer you assistance according to your company’s needs.