28 Jun 2004
A new Agreement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital was signed today between the Republic of Singapore and the Federal Republic of Germany.
The signing took place in Singapore. Mr. Koh Cher Siang, Commissioner of Inland Revenue, signed on behalf of Singapore and His Excellency Mr. Andreas Michaelis, the Ambassador of Germany, signed on behalf of Germany.
The new Agreement will replace the previous one signed on 19th February 1972. While the previous Agreement has worked well for both countries, changes in economic circumstances and policies have since made it necessary to review and revise the old Agreement and further strengthen the economic relations between the two countries.
The terms of the new Agreement will continue to serve the purpose of avoidance of double taxation on income earned in one country by a resident of the other. The new Agreement will continue to facilitate the cross-flow of trade, investment, financial activities and technical know-how between Singapore and Germany. Improvements in the new Agreement include enhancements to the withholding tax rates. The withholding tax rate on interest income is reduced from 10% to 8%, while that on dividends paid to beneficial owners with a certain minimum capital stake in the company is lowered from 10% to 5%. In addition, more companies can now benefit from this lower withholding rate on dividends as the amount of capital ownership required is lowered from 25% to 10%.
The new Agreement will enter into force after ratification by both countries. The provisions of the new Agreement will apply to income arising in the year after its entry into force. The provisions of the old Agreement will cease to apply from then on. Details of the new Agreement is available on the website of the Inland Revenue Authority of Singapore at www.iras.gov.sg.
INLAND REVENUE AUTHORITY OF SINGAPORE