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Ratification Of The Agreement Between Singapore And Latvia For The Avoidance Of Double Taxation And The Prevention Of Fiscal Evasion With Respect To Income

18 Feb 2000

An Agreement between the Government of the Republic of Singapore and the Government of the Republic of Latvia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income was signed on 6 October 1999. This Agreement enters into force today, following the completion of ratification formalities. The provisions of the Agreement shall have effect on income derived on or after 1 January 2001.

2 The Agreement provides a framework which aims to encourage greater cross border flow of trade, investment, technical know-how and expertise between Singapore and Latvia, strengthening bilateral economic ties for the benefit of the 2 countries. The Agreement provides for the elimination of double taxation on income which may occur as a result of cross-border economic activities between the 2 countries. The taxing rights of each country on all forms of income are also specified in the Agreement.

3 The Agreement also provides for the exemption or reduction of tax in the country of source on various types of income derived by residents of the other country, including:

a) the exemption from tax in the country of source on profits derived from the operations of ships or aircraft in international traffic;

b) the reduction of source country tax on dividends, interest and royalties.

4 To provide relief from double taxation, Singapore will allow tax paid in Latvia as a credit against Singapore tax on income arising in Latvia. In the case of dividends received from Latvia, the Latvian tax on that portion of the profits out of which the dividends were paid would also qualify for tax credit in Singapore if the shareholder is a company owning at least 10% of the share capital of the company paying the dividends.

5 The full text of the Agreement is published in the Government Gazette today. With this Agreement coming into force, Singapore will now have in force comprehensive Avoidance of Double Taxation Agreements with 39 countries. Further enquiries regarding the Agreement may be directed to the Inland Revenue Authority of Singapore at telephone number 351 2122.