Double Taxation Agreements in Singapore: What Expats Need to Know

Understanding how these DTAs work is essential for optimising cross-border tax liabilities and remaining compliant with international regulations.

This guide explores how a double taxation agreement in Singapore works for individuals and businesses, outlines the rules for determining tax residency, and explains the process for claiming tax relief under a DTA.

What Are Double Taxation Agreements?

Double taxation refers to the imposition of tax on the same income by two or more jurisdictions. This typically occurs when an individual or business has financial connections in multiple countries, each asserting taxing rights over the same income.

For example, a company headquartered in Singapore that derives profits from the United Kingdom may face tax obligations in both jurisdictions.

To prevent individuals and businesses from being taxed twice on the same income, as well as to promote trade and investment, countries establish double taxation agreements (DTAs).

These treaties outline how tax obligations are distributed between jurisdictions to reduce the overall tax burden of their residents.

How Singapore Addresses Double Taxation

Singapore operates a territorial tax system, meaning personal income tax is levied only on income earned within Singapore, irrespective of an individual’s residency status.

Foreign-sourced income is exempt from expat taxation in Singapore, except in cases where it is received through a Singapore-based partnership.

For corporate entities, Singapore imposes a flat tax rate of 17% on income earned locally, and in certain instances, on foreign income that is remitted into Singapore.

Under this system, income may be taxed both in the jurisdiction where it is generated and again in Singapore if remitted, potentially resulting in double taxation.

To mitigate these effects, Singapore provides three primary forms of double taxation relief:

1. Double Taxation Agreements (DTAs).
2. Foreign tax credits.
3. Foreign-sourced income exemptions.

How Singapore’s Double Taxation Agreements Work

A double taxation agreement (DTA) is a bilateral treaty between Singapore and a foreign jurisdiction that allocates taxing rights between the two countries to prevent the same income from being taxed twice.

These treaties typically apply to both individuals and businesses that have cross-border income or investments.

While the specific provisions of each DTA vary, they generally operate by either reducing or eliminating tax liabilities in one of the two jurisdictions.

For example, a Singapore-based company earning income in a DTA partner country may be taxed on that income in Singapore upon remittance, but may receive an exemption or reduced tax rate in the foreign jurisdiction, depending on the treaty terms.

Singapore has one of the world’s most comprehensive DTA networks, with nearly 100 agreements in force. These treaties fall into two primary categories:

1. Comprehensive DTAs – Cover all types of income and provide relief from double taxation across a broad range of income sources.
2. Limited DTAs – Apply only to specific sectors, such as air transport and shipping income.

The following table shows some of the jurisdictions with which Singapore has signed DTAs, along with the type of DTA and whether it contains arbitration provisions:

In addition to DTAs, Singapore has entered into Exchange of Information (EOI) arrangements that comply with the international EOI Standard, allowing the exchange of tax-related information between jurisdictions to combat tax evasion.

Under these agreements, participating jurisdictions may request specific tax details, provided a clear rationale is given.

Tax Residency Rules

The benefits of Singapore’s DTAs are available only to tax residents of either Singapore or the treaty partner jurisdiction.

To qualify as a tax resident in Singapore, a company must be controlled and managed in Singapore — typically meaning that strategic decisions are made within the country.

To determine whether this is true, the Inland Revenue Authority of Singapore (IRAS) considers the following factors:

• Location of board meetings: Are meetings held in Singapore?
• Decision-making process: Are key decisions made during Singapore-based meetings?
• Residency of directors: Are directors physically based in Singapore?
• Authority of local directors: Do local directors exercise strategic control?
• Presence of key executives: Are senior officers (e.g. CEO, CFO) based in Singapore?

For virtual board meetings, IRAS considers the meeting to be held in Singapore if:

• At least 50% of directors with executive powers are physically present in Singapore, or
• The chairman of the board is physically present in Singapore.

How To Apply for a Certificate of Residency?

To claim DTA relief, a Singapore-resident entity must provide proof of tax residency to the foreign tax authority by submitting the following documents:

• Certificate of Residence (COR) issued by IRAS.
• Certified tax relief claim form, if required by the treaty partner.

Application Process:

• Most applications are submitted via IRAS’ myTax Portal, with an expected processing time of seven days.
• Paper applications may be submitted in cases where the entity is:
  1. A sole proprietorship owned by the applicant company.
  2. A partner in a partnership business.
  3. Incorporated outside Singapore.

Paper form processing typically takes 14 days but may take longer for complex cases.

In some instances, claimants must complete and submit a foreign tax reclaim form, in addition to or instead of the COR.

This form must be certified by IRAS and physically submitted to their official address. IRAS processes these within approximately one month of receipt.

How Do Foreign Tax Credits and Exemptions in Singapore Work?

In cases where a DTA includes a reduction rather than the elimination of taxes on income earned in a foreign jurisdiction, Singapore tax residents may claim foreign tax credits to mitigate the effects of double taxation. There are two types of foreign tax credits:

• Double tax relief (DTR): DTR allows a Singapore tax resident to claim credit for foreign taxes paid on income that is also taxable in Singapore, provided the payment complies with the relevant DTA. The credit is limited to the lower of:
  • The foreign tax paid, or
  • The Singapore tax that would have been payable on the same income.
• Unilateral tax credit (UTC): Available to Singapore tax residents earning income from non-treaty jurisdictions. UTC can be claimed if certain IRAS conditions are met.

You may also claim tax exemptions for certain types of income earned in a foreign jurisdiction and received in Singapore, regardless of whether a DTA is in place. There are three categories of tax-exempted income:

• Foreign-sourced dividends.
• Profits from a foreign branch.
• Foreign-sourced service income.

To qualify for this exemption, you must meet all of the following criteria:

1. The foreign income has already been subject to tax in the foreign jurisdiction.
2. The maximum corporate income tax rate in the foreign jurisdiction is at least 15% at the time the income is received.
3. The Comptroller of Income Tax confirms that the exemption is beneficial to the tax resident company.