Global Tax Alert | 25 July 2013

Singapore and Barbados sign a new income tax treaty

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On 15 July 2013, Singapore and Barbados signed their first income tax treaty (Treaty). This alert highlights pertinent features of the Treaty.

Article 5, Permanent Establishment (PE), includes a more liberal service PE provision in which furnishing of services, including consultancy services through employees or other personnel would create a PE only if service activities continue for a period or periods aggregating more than 365 days in any 15-month period.

Article 10, Dividends, provides for exclusive resident country taxation.

Articles 11, Interest, offers a full exemption from taxation on interest paid to the government and governmental agencies of the other Contracting State specified in this article. A 12% rate will be applied in all other cases.

Article 12, Royalties, offers an 8% rate on royalty payments.

Article 13, Capital Gains, provides for exclusive resident country taxation if the gain is not arising from the disposal of immovable property, or movable property forming part of the business property of a PE.

The Treaty will enter into force upon exchanging notifications of ratification and become effective in the case of Barbados, on or after 1 January following the year in which the Treaty enters into force. In the case of Singapore, the Treaty will be effective in respect of tax chargeable for any year of assessment1 beginning on or after 1 January in the second calendar year following the year in which the Treaty enters into force.

Endnote

1. The tax year is known as the year of assessment, which runs from 1 January to 31 December. Singapore adopts a preceding year basis of assessment.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Solutions LLP, Singapore
  • Chung-Sim Siew Moon
    +65 6309 8807
    siew-moon.sim@sg.ey.com
  • Russell Aubrey
    +65 6309 8690
    russell.aubrey@sg.ey.com
Ernst & Young LLP, Asia Pacific Business Group, New York
  • Chris Finnerty
    +1 212 773 7479
    chris.finnerty@ey.com
  • Jeff Hongo
    +1 212 773 6143
    jeff.hongo@ey.com
  • Kaz Parsch
    +1 212 773 7201
    kazuyo.parsch@ey.com
  • Bee-Khun Yap
    +1 212 773 1816
    bee-khun.yap@ey.com

EYG no. CM3676