Singapore Tax Treaties with Taiwan

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

Tw-Q-10:
台灣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?
Taiwan Parent Company, can apply for zero tax rate without PE under DTA in Singapore?

Tw-A-10:
Yes.
Taiwan has DTA with Singapore, and if Taiwan 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, Taiwan Legal Resident company still needs to send the zero-tax application to Singapore Tax Bureau for being approved.

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

Tw-A-20:
According to DTA Article 5 item 7, a Singapore subsidiary will not be treated as PE of Taiwan Parent company as an investor because it is a separate legal entity.
That means if a Singapore Subsidiary pay a service fee to Taiwan Parent Company through service contract signed between subsidiary and Taiwan Parent company
As an investor, Taiwan 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.

Tw-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?

Tw-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/

Tw-Q-40
台灣母公司有新加坡來源所得的各項所得扣繳稅率為何?
When Taiwan Resident company has Singapore domestic sourced income, what are the withholding tax rates for various incomes in Singapore?

Tw-A-40:
Taiwan 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 is applied, the DTA rates between Taiwan 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.

Tw-Q-50
當台灣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 Taiwan Tax Resident has Singapore domestic sourced income, what is Singapore’s application procedure based on the DTA preferential tax rate?

Tw-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 Taiwan

Singapore and Taiwan 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 30 December 1981 and takes effects from 1 January 1982.

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

Withholding Tax

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

*In Article 10, there is no withholding tax imposed on dividends paid by a Singapore Resident enterprise to Taiwan Resident enterprise.

*In the absence of an Interest Article in the DTA, interest may be taxed by Singapore in accordance with its domestic law.

*Article 11 explained royalties means payment for the use of, or the right to use, any copyright of scientific work, any patent, trademark, design or model, plan, secret formula, or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning the industrial or scientific experience.

*Technical services are covered by the business profits in Article 7. Singapore corporations may not tax payments for technical services rendered by a Taiwan enterprise unless it is attributable to PE.
Technical services rendered in an independent capacity should be covered in Article 12 (see professional services) instead.

*Article 12 of DTA between Singapore and Taiwan explained, Singapore may tax payments for general professional services rendered by Taiwanese resident and no limitation is placed on the rate of withholding tax if the services are performed in Singapore and The Taiwanese resident is present in Singapore for more than 183 days in the calendar year.

Elimination of Double Taxation

Article 18 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 21 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
For how to exchange data files between your Finance Accounting System and Evershine  Cloud Accounting  Information System,
please send an email to HQ4sin@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable to your case.
Email address:dalechen@evershinecpa.com
linkedin address: Dale Chen

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