Singapore Tax Treaties with China

Email: sin4ww@evershinecpa.com

Singapore CPA Lau Wei-Koon, speak in both English and Chinese
215 Henderson Road #03-03 Henderson Industrial Park Singapore 159554

CN-Q-10:
中國母公司在新加坡是否可以依DTA申請沒有常設機構(PE)下零稅率?
China Parent Company, can apply for zero tax rate without PE under DTA in Singapore?

CN-A-10:
Yes.
China has DTA with Singapore, and if China Legal Resident company is without PE (Permanent Establishment), it will be redeemed as “non-Singapore Domestic Sourced Income”.
That means Singapore will levy zero-tax.
However, China Legal Resident company still needs to send zero-tax application to Singapore Tax Bureau for being approved.

CN-Q-20:
中國母公司在新加坡設立了新加坡子公司， 中國母公司替子公司服務收入能否申請零稅率?
When China Parent Company as an Investor, set up a Singapore subsidiary, and provide services from China to Singapore Subsidiary, can apply for zero tax rate without PE under DTA in Singapore?

CN-A-20:
According to DTA Article 5 item 7, a Singapore subsidiary will not be treated as PE of China Parent company as an investor because it is a separate legal entity.
That means if a Singapore Subsidiary pay a service fee to China Parent Company through service contract signed between subsidiary and China Parent company
as an investor, China Parent Company can apply zero tax.
As for if the paid amount is reasonable, it will get involved TP (Transfer Pricing) judgment by Singapore Tax Bureau.

CN-Q-30:  
新加坡依DTA沒有PE下零稅率申請的程序為何?
 What is the procedure for Singapore to apply for zero tax rate under DTA without PE?

CN-A-30:
Approval for tax exemption must be obtained from the IRAS.
IRAS will grant the tax exemption if the following conditions are met:

1. At least 15% in corporate taxes are paid on the income sourced from the foreign jurisdiction.
2. The company has been subjected to tax in the foreign jurisdiction, this can be different from the headline tax; and
3. The IRAS is satisfied that granting the tax exemption will benefit the tax resident in Singapore.

Below are the documents required:

*A No PE declaration letter
*Certificate of residence (COR) issued by the competent authority of the beneficial owner’s country of residence (Certified and in English)
*Submit the document to IRAS by 31 March of the following year if the claim is for a period in the current calendar year.
Refer to the below website for further details: –
https://www.iras.gov.sg/irashome/Other-Taxes/Withholding-tax/Filing-and-Paying-Withholding-Tax/When-to-File-and-Pay-Withholding-Tax/Claiming-Relief/Exemption-under-the-Avoidance-of-Double-Taxation-Agreement/

CN-Q-40:  
中國母公司有新加坡來源所得的各項所得扣繳稅率為何?
When China Resident company having Singapore domestic sourced income, what are the withholding tax rates for various incomes in Singapore?

CN-A-40:
China has DTA with Singapore, and if you are with PE (Permanent Establishment) in Singapore, your income will be considered as Singapore domestic sourced income.
As for levying Tax Rate, please be aware:
if Singapore Tax rate > DTA Rate, adopt DTA Rate; if Singapore Tax rate < DTA Rate, adopt Singapore Rate.
If DTA applied, the DTA rates between China and Singapore are as below:

*The withholding tax rate under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.

CN-Q-50
當中國稅務居民有新加坡來源所得，依DTA優惠稅率申請的程序為何?
When China Tax Resident has Singapore domestic sourced income, what is Singapore’s application procedure based on the DTA preferential tax rate?

CN-A-50:
Approval for tax exemption must be obtained from the IRAS.
*Certificate of residence (COR) issued by the competent authority of the beneficial owner’s country of residence (Certified and in English)
*Submit the document to IRAS by 31 March of the following year if the claim is for a period in the current calendar year.
Refer to the below website for further details: –

https://www.iras.gov.sg/irashome/Other-Taxes/Withholding-tax/Filing-and-Paying-Withholding-Tax/When-to-File-and-Pay-Withholding-Tax/Claiming-Relief/Exemption-under-the-Avoidance-of-Double-Taxation-Agreement/

Summary of TAX TREATY between Singapore and CHINA

The Government of the Republic of Singapore and The Government of the People’s Republic of China concluded and signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Double Taxation Agreements, DTA), on 11 July 2007 and takes effects from 1 January 2008.

Permanent Establishment
Article 5 states the term permanent establishment (PE) means a fixed place of business which generally includes the followings:
*A place of management
*A branch
*An office
*A factory
*A workshop
*The furnishing of consultancy services through employees or other personnel for periods aggregating more than 183 days.

Withholding Tax

*Article 7 of DTA between Singapore and China explained, Singapore may not tax payments on business profits rendered by China corporations unless it is attributable to the permanent establishment situated in the relevant territory.

*In Article 10, dividends paid by a Singapore Resident enterprise to China Resident enterprise, the tax charged shall not exceed 5% if China enterprise holds directly at least 25% of the capital of Singapore enterprise. In other cases, tax charged shall not exceed 10%.

*Article 11 states that where the beneficial owner of the interest (excluding interest from the government) is a non-resident, shall be taxed in the territory in which it arises at the rate not exceeding 10% of the gross interest.

*Article 12 explained royalties means payment for the use of, right to use of any copyright of literary, artistic, or scientific works including cinematographic films and films or tapes for radio or television broadcasting, any computer software, patent, trademark, design or model, plan, secret formula, or process, or information concerning industrial, commercial, or scientific experience.
Royalties for right of use of industrial, commercial, or scientific equipment, effective rate of 6% (10% x 60% of the royalties) of the gross amount of these payments.

*Technical services are covered by the business profits in Article 7. Singapore corporations may not tax payments for technical services rendered by a China enterprise unless it is attributable to PE.
Technical services rendered in an independent capacity should be covered in Article 14 (see professional services) instead.

*A professional service or other activities provided by individuals of an independent character was explained in Article 14.
Singapore corporations may not tax payments for professional service rendered by a China resident unless the China resident has a fixed place or stay in Singapore for 183 days or more.
An independent profession includes physicians, lawyers, engineers, architects, dentists, and accountants.

Elimination of Double Taxation

Article 22 of the DTA states that double taxation shall be eliminated by allowing tax credit to be made available to the home resident territory.
It shall be credited against the tax levied in the first-mentioned territory on that resident.
However, the amount of credit shall not exceed the amount of the tax in the first-mentioned territory.

Exchange of Information

Article 25 states that the competent authorities of the territories shall exchange such information (including documents or certified copies of the documents) relevant to the provision of this Agreement.

Please be aware of below Warning:
The above contents are digested by Evershine R&D  and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Singapore Evershine BPO Service Limited Corp.
E-mail: sin4ww@evershinecpa.com

Singapore CPA Lau Wei-Koon, speak in both English and Chinese
215 Henderson Road #03-03 Henderson Industrial Park Singapore 159554

or
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