The Double Taxation Relief (Taxes on Income) (Singapore) Order 1997

Made: 17th December 1997

At the Court at Buckingham Palace, the 17th day of December 1997 Present, The Queen’s Most Excellent Majesty in Council

Now, therefore, Her Majesty, in exercise of the powers conferred upon Her by section 788 of the said Act, and of all other powers enabling Her in that behalf, is pleased, by and with the advice of Her Privy Council, to order, and it is hereby ordered, as follows:—

1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (Singapore) Order 1997.

2

It is hereby declared—

• (a) that the arrangements specified in the Agreement set out in Part I of the Schedule to this Order and in the Exchange of Notes constituting an Agreement set out in Part II of that Schedule have been made with the Government of the Republic of Singapore with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of Singapore;

• (b) that those arrangements include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of Singapore concerning taxes covered by the arrangements including, in particular, provisions about the prevention of fiscal evasion with respect to those taxes; and

• (c) that it is expedient that those arrangements should have effect.

SCHEDULE

PART I — AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE REPUBLIC OF SINGAPORE FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS.

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Singapore;

Desiring to conclude a new Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains;

Have agreed as follows:

ARTICLE 1 — Personal scope

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2 — Taxes covered

ARTICLE 3 — General definitions

ARTICLE 4 — Residence

ARTICLE 5 — Permanent establishment

ARTICLES — Income from immovable property

ARTICLE 7 — Business profits

ARTICLE 8 — Shipping and air transport

ARTICLE 9 — Associated enterprises

ARTICLE 10 — Dividends

ARTICLE 11 — Interest

ARTICLE 12 — Royalties

ARTICLE 13 — Capital gains

ARTICLE 14 — Independent personal services

ARTICLE 15 — Dependent personal services

ARTICLE 16 — Directors' fees

Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17 — Artistes and sportsmen

ARTICLE 18 — Pensions

ARTICLE 19 — Government service

ARTICLE 20 — Students and trainees

ARTICLE 21 — Teachers

An individual, who is a resident of one of the Contracting States immediately before making a visit to the other Contracting State, and who makes such visit at the invitation of the Government of that other Contracting State, or of a recognised university, college, school or other similar recognised educational institution in the other Contracting State, solely for the purpose of teaching at such educational institution for a period not exceeding two years shall be exempt from tax in the first-mentioned Contracting State on his remuneration for such teaching.

ARTICLE 22 — Other income

ARTICLE 23 — Elimination of double taxation

ARTICLE 24 — Limitation of relief

ARTICLE 25 — Non-discrimination

ARTICLE 26 — Mutual agreement procedure

ARTICLE 27 — Exchange of information

ARTICLE 28 — Members of diplomatic or permanent missions and consular posts

ARTICLE 29 — Entry into force

ARTICLE 30 — Termination

This Agreement shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of the Agreement. In such event; the Agreement shall cease to have effect:

• (a) in the United Kingdom:

• (i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April in the calendar year next following that in which the notice is given;

• (ii) in respect of corporation tax, for any financial year beginning on or after 1st April in the calendar year next following that in which the notice is given;

• (b) in Singapore:

• in respect of Singapore tax for any year of assessment beginning on or after 1st January in the second calendar year following that in which the notice is given.

In witness whereof the undersigned, duly authorised thereto by their respective Governments, have signed this Agreement.

Done in duplicate at Singapore this 12th day of February 1997

For the Government of the United Kingdom of Great Britain and Northern Ireland:

Malcolm Rifkind

For the Government of the Republic of Singapore:

Richard Hu

PART II — EXCHANGE OF NOTES

Your Excellency

• Singapore

• 12th February 1997

I have the honour to refer to the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains which has been signed today and to propose on behalf of the Government of the United Kingdom of Great Britain and Northern Ireland that:

• (1) for the purposes of the Agreement a charity or pension fund created, established and recognised for tax purposes in a Contracting State shall be treated as a resident of that State.

• (2) in relation to paragraph (3) of Article 8:

this provision shall not apply to interest which arises from the lending of funds between associated enterprises.

• (3) in relation to paragraph (1) of Article 17:

income referred to in this paragraph shall include income derived from any personal activities exercised by a resident of one Contracting State in the other Contracting State relating to his reputation as an entertainer or sportsman.

• (4) in relation to Article 18:

the term “annuity” refers to an annuity paid in recognition of past employment services.

If the foregoing proposals are acceptable to the Government of the Republic of Singapore, I have the honour to suggest that the present Note and Your Excellency’s reply to that effect should be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the entry into force of the Agreement.

Malcolm Rifkind

Secretary of State for Foreign and Commonwealth Affairs of the United Kingdom of Great Britain and Northern Ireland

Your Excellency

• Singapore

• 12th February 1997

I have the honour to acknowledge the receipt of your Note of today’s date which reads as follows:

Your Excellency I have the honour to refer to the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains which has been signed today and to propose on behalf of the Government of the United Kingdom of Great Britain and Northern Ireland that: 1 for the purposes of the Agreement a charity or pension fund created, established and recognised for tax purposes in a Contracting State shall be treated as a resident of that State. 2 in relation to paragraph (3) of Article 8: this provision shall not apply to interest which arises from the lending of funds between associated enterprises. 3 in relation to paragraph (1) of Article 17: income referred to in this paragraph shall include income derived from any personal activities exercised by a resident of one Contracting State in the other Contracting State relating to his reputation as an entertainer or sportsman. 4 in relation to Article 18: the term “annuity” refers to an annuity paid in recognition of past employment services. If the foregoing proposals are acceptable to the Government of the Republic of Singapore, I have the honour to suggest that the present Note and Your Excellency’s reply to that effect should be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the entry into force of the Agreement.

I have further the honour to confirm that the Government of the Republic of Singapore accepts the proposals contained in your Note and agrees that the same and the present reply shall be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the entry into force of the Agreement.

Richard Hu

Minister for Finance of the Republic of Singapore.

Signed

N. H. Nicholls — Clerk of the Privy Council

Explanatory note

(This note is not part of the Order)

The Agreement with the Republic of Singapore (which replaces the Agreement set out in the Schedule to the Double Taxation Relief (Taxes on Income) (Singapore) Order 1967 (S.I. 1967/483) as amended by the Protocol set out in the Schedule to the Double Taxation Relief (Taxes on Income) (Singapore) Order 1978 (S.I. 1978/787)) is set out in Part I of the Schedule to this Order.

The Agreement provides for business profits not arising through a permanent establishment to be taxed only in the country of the taxpayer’s residence. Profits attributable to a permanent establishment may be taxed in the country in which the permanent establishment is situated (Articles 5 and 7).

Income from immovable property and gains derived from the alienation of such property may be taxed in the country in which the property is situated (Articles 6 and 13).

International transport profits are generally to be taxed only in the country of residence of the operator (Article 8).

The Agreement includes rules for determining taxable profits when a company in one country is related to a company in the other country (Article 9).

The rate of tax imposed in the country of source on dividends derived by a resident of the other country shall not, in general, exceed 5 per cent. of the gross amount if the recipient is a company controlling at least 10 per cent. of the voting power in the company paying the dividends; and 15 per cent. of the gross amount of the dividends in all other cases (Article 10).

The rate of tax imposed in the country of source on interest derived by a resident of the other country is, in general, not to exceed 15 per cent. of the gross amount flowing to the other country, where the interest arises or accrues on or before 31st December 1999 and 10 per cent. in all other cases. Certain other interest (e.g. interest payable to the Government of the other country) is exempt from tax in the country of source (Article 11).

The rate of tax imposed in the source country on royalties is limited to 15 per cent. of the gross amount of the royalties where the royalties arise or accrue before 31st December 1999 and 10 per cent. of the gross amount of the royalties in all other cases (Article 12).

Gains arising from the disposal of movable property are normally to be taxed only in the country of the taxpayer’s residence. Gains arising from the disposal of assets of a permanent establishment or fixed base which the taxpayer has in the other country may be taxed in that other country (Article 13).

The earnings of temporary business visitors and some other individuals are, subject to certain conditions, only to be taxed in the country of the taxpayer’s residence (Articles 14 and .15). Fees received by a resident of one country in his capacity as a director of a company resident in the other country may be taxed in the latter country (Article 16). Income derived from the activities of artistes and sportsmen may be taxed in the country in which those activities are performed (Article 17). Occupational pensions (other than those paid in respect of Government service), payments made under the social security legislation of either country and annuities are to be taxed only in the recipient’s country of residence, provided that the recipient is subject to tax in that country on the income concerned (Article 18). Government service remuneration and pensions are normally taxable only by the paying Government (Article 19). Payments made to students and business or technical apprentices and the remuneration of teachers are, subject to certain conditions, to be exempt from tax in the country visited (Articles 20 and 21). Other income not specified in the Agreement remains taxable only in the recipient’s country of residence unless it arises in the other country (Article 22).

Where income continues to be taxable in both countries credit will be given in the taxpayer’s country of residence for tax imposed by the other country. The credit to be given in the United Kingdom for tax imposed in the Republic of Singapore includes, subject to time limits, credit for tax spared under certain provisions of Singapore law. In the case of dividends, the United Kingdom will give credit for the underlying tax paid in the Republic of Singapore where the shareholder is a United Kingdom company which controls at least 10 per cent. of the voting power in the company paying the dividends (Article 23).

There are provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country (Article 25) and for consultation (Article 26) and exchanges of information (Article 27) between the taxation authorities of the two countries.

The Exchange of Notes set out in Part II of the Schedule contains agreements between the United Kingdom and the Republic of Singapore in relation to Articles 8, 17 and 18 of the Agreement.

The Agreement will enter into force on the date of the later of the notifications by each country of the completion of its legislative procedures. The Agreement is to take effect in the United Kingdom on or after 1st April in respect of corporation tax and on or after 6th April for income tax and capital gains tax in the calendar year next following that in which it enters into force. The date of entry into force will in due course be published in the London, Edinburgh and Belfast Gazettes.

Footnotes