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PROTOCOL
AMENDING THE INDIA SINGAPORE TAX TREATY
On
June 29, 2005, India and Singapore signed the Comprehensive Economic
Cooperation Treaty ("CECA"), which is a strategic compact
between the two countries to enhance bilateral trade. As a part
the CECA, India and Singapore also agreed on a protocol, ("the
Protocol") in a move to improve the existing Double Taxation
Avoidance Agreement ("DTAA"), which was signed in January
1994.
The
amendments which have been effected to the existing India-Singapore
DTAA through the signing of the Protocol are as follows:
1.
Capital Gains - Capital gains derived by a resident of
a Contracting State shall be taxable only in that State. However,
a resident of a Contracting State shall not be entitled to this
benefit if its affairs are arranged with the primary purpose to
take advantage of the said benefit.
In
addition, a shell/conduit company with negligible or nil business
operations or with no real and continuous business activities
in Singapore is disallowed from enjoying the capital gains exemption.
For
the purposes of the capital gains tax exemption, a company is
not a shell company if:
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It is listed on a recognised stock exchanges of the Contracting
State; or
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Its
total annual expenditure on operations in the residence State
is equal to or more than S$200,000 or Indian Rs 50,00,000
in the respective Contracting State as the case may be, in
the immediately preceding period of 24 months from the date
the gains arise.
2.
Exchange of Information - On a request made by a Contracting
State, the revenue authority of the other Contracting State shall
collect, and share with the first mentioned Contracting State,
through its Competent Authority, whatever information that it
is competent to obtain for its own purposes under its law.
3.
Review - It has been agreed that there shall be an inter-governmental
group consisting of representatives of the revenue authorities
of the two countries, which shall review the working of the provisions
of the Protocol at least once a year or earlier at the request
of either of the two countries.
4.
Term of the Protocol - The above mentioned provisions
of the Protocol shall remain in force so long as the DTAA between
India and Mauritius provides that any gains from the alienation
of shares in any company which is a resident of a Contracting
State shall be taxable only in the Contracting State in which
the alienator is a resident.
5.
Royalties and Fee for technical Services ("FTS") - The
withholding tax on royalties and FTS has been reduced to 10% to
bring it in line with the provisions of Indian Income Tax Act.
The
protocol forms an integral part of the existing DTAA and shall
come into force from August 1, 2005.
Source:
Inland
Revenue Authority of Singapore website
- 1
Inland
Revenue Authority of Singapore website
- 2
You can direct
your queries or comments to Roshni
Shanker or Bijal
Ajinkya
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