PARIS: Singapore and France signed an amended Agreement for the Avoidance of Double Taxation (DTA) to lower withholding tax rates for dividends and new anti-abuse provisions.
The most notable changes are the following:
Withholding tax rate for dividends is reduced to 5 percent (from 10 percent previously) if the beneficial owner is a company which owns directly or indirectly at least 10 per cent of the share capital of the company paying the dividends. In other cases the withholding rate is 15 percent. However, since Singapore’s domestic withholding rate for dividends is nil, dividends will be exempt from withholding tax in Singapore.
Distribution received from an investment vehicle that derives its income (that is not taxed) from immovable property shall be treated as a dividend. If the beneficial owner holds directly or indirectly at least 10 per cent of the share capital of the investment vehicle, the distribution will be taxed at the domestic rate of the country that the distribution arises.
However, if the beneficial owner (resident of the other country) carries on business through a permanent establishment in the country of the payer of the dividends and the holding in respect of which the dividends are paid is effectively connected with the permanent establishment, the above two provisions will not apply. The country of the permanent establishment will impose a tax on the profits only to the extent that is attributable to the permanent establishment.
