SINGAPORE CORPORATION TAXATION GUIDE

Singapore is often cited as the leading example of countries that continues to

redce corporate income tax rates and introduce various tax incentives to
attract and keep global investments.
Singapore has a single-tier territorial based flat-rate corporate income tax
system.
Effective tax rates as one of the lowest in the world and the general
business friendliness of Singapore are the two important factors
contributing to the economic growth and foreign investment into the citystate.
SINGLE-TIER INCOME TAX SYSTEM
Singapore has adopted a single-tier corporate income tax system, which
means there is no double-taxation for stakeholders, Since January 1, 2003.
Tax paid by a company on its chargeable income is the final tax and all
dividends paid by a company to its shareholders are exempt from further
taxation.
SINGAPORE-INDIA DOUBLE TAX TREATY
A DTA between Singapore and another jurisdiction serves to prevent double
taxation of income earned in one jurisdiction by a resident of the other
jurisdiction.
A DTA also makes clear the taxing rights between Singapore and her treaty
partner on different types of income arising from cross-border economic
activities between the two jurisdictions. The agreements also provide for
reduction or exemption of tax on certain types of income.

SCOPE OF DTA (DOUBLE TAX AGREEMENT)

Tax treaty provisions apply to residents of Singapore and the contracting
country (India).
Benefits of this do not extend to any shell companies.
A resident of a contracting country is deemed to be a shell company if its
total annual expenditure on operations in that contracting country is less than
$200,000 or Rs.50, 00,000 as the case may be, in the immediately preceding
period of 24 months from the date the gains arise.
TAXATION OF BUSINESS PROFITS
Business income or profits of an enterprise are taxable in the country in
which the enterprise is resident.
If the enterprise carries out business in the other contracting country through
a permanent establishment situated in that contracting country, then the
profits or income derived from that permanent establishment alone will be
liable to tax in the other contracting country.
TAXATION OF DIVIDENDS INCOME
Dividends paid by a company that is a resident of one contracting country to
a resident of the other contracting country may be taxed in that other
country.
However dividends may also be taxed at source country:
a. If the recipient country owns at least 25% of the shares then a reduced
tax rate of 10% would apply or otherwise 15% of the gross amount of
the dividends.
b. Indian-residents shareholders who derive dividends from Singaporeresidents Company are exempt from Singapore on the dividend
income.

TAXATION OF FEES FOR TECHNICAL SERVICES

Fees arising from technical services in a contracting country and paid to a
resident of the other contracting country may be subject to taxation in the
recipient country.
Above provision do not apply if the recipient of the fees:
a. Permanent Establishment in the country in which the fees arises.
b. Performs independent personal services from a fixed base that is
situated in the country in which the fees arises and that the right,
property or contract in respect of which the fees are paid is effectively
connected with that permanent establishment or fixed base.
c. In such cases, the fees will be treated as income of the permanent
establishment or as income derived from the performance of personal
services and will be taxed accordingly.
TAXATION OF EMPLOYMENT INCOME
Salaries, wages and other similar remuneration in respect of employment
will be subject to tax in the country in which the employment is exercised.
However, the employment income will be subject to tax in the recipients
country of residence and not the contracting country in which the
employment is exercised under the following circumstances:
a. The individual spends 183 days or less in the country in which
employment is exercised for a given fiscal year.
b. The remuneration is paid by, or on behalf of, an employer who is not
a resident of the country in which the employment is exercised.
c. The remuneration is not borne by a permanent establishment or a
fixed base in the country in which the employment is exercised.
d. The remuneration is derived in respect of an employment exercised
aboard a ship or aircraft operated in international traffic.

DOUBLE TAXATION RELIEF

 In India: India offers its residents double taxation relief by deduction i.e.
domestic tax is applied on the income after deducting Singapore tax
suffered.
In Singapore: Singapore offers its residents tax credit relief for double
taxation of income. In other words, Indian tax paid in respect of income
from sources within India shall be allowed as a credit against Singapore tax
payable in respect of that income.
EXCHANGE OF INFORMATION
The tax authorities of the contracting countries shall exchange tax
information as and when necessary.
The information exchanged will remain confidential and will only be
disclosed to persons (including a court or administrative body) concerned
with the assessment, collection, e-enforcement or prosecution in respect of
the taxes covered by the DTA.
There will be no disclosure of any trade, business, industrial or professional
secret or trade process.
SOURCE (http://www.guidemesingapore.com/taxation/double-taxtreaties/singapore-india-dta)