Double Taxation Agreement (DTA) Simplified

Double Taxation Agreement (DTASummary: An agreement so you need to pay taxes only once for profit made from cross-country transactions.

A Double Taxation Agreement (DTA) is a deal between Singapore and other countries that avoids a situation where an individual might be taxed twice on the same income earned from trans-border transactions. Thanks to these agreements, individuals conducting business in Singapore and the target country will receive tax concessions or completely avoid it on certain kinds of income. Only Singaporean tax residents and tax residents of the partner country can actually benefit from these perks.


Understanding DTA for Singaporean Tax Residents

As a tax-paying resident of Singapore, if you’re earning foreign income from a country where an applicable treaty is in place, you won’t have to pay taxes or you might end up paying at a reduced rate to the other country involved. To make this happen, you’ll need to provide a Certificate of Residence (COR) to the foreign country in question, affirming your tax resident status in Singapore.


DTA for Tax Residents from Treaty Countries:

If you are a tax-paying resident from the treaty country and you earn money from Singapore, the DTA allows you to seek tax relief from Singapore’s Income Tax. You’ll have to submit a Certificate of Residence from Non-Residents, sanctioned by the tax authority of your resident country to IRAS (Inland Revenue Authority of Singapore).

The specific terms and relief vary depending on the DTA Singapore has negotiated with different countries. The methods of relief encompass tax credits, tax reductions, tax exemptions, tax sparing credits, and relief by deductions.

In cases where Singapore lacks a DTA with another country, investors can still receive a one-sided tax credit for foreign income taxes that have been paid on the income earned. To acknowledge, Singapore already has a long list of countries they have DTAs with, and they’re continuously negotiating to add more. You can find the updated list of Singapore’s DTAs here.