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Ratification Of The Revised Agreement Between Singapore And China For The Avoidance Of Double Taxation

17 Sep 2007

The revised Agreement for the Avoidance of Double Taxation (DTA) between Singapore and China was signed on 11 July 2007 by Mr Moses Lee, Commissioner of Inland Revenue from Singapore and Mr Wang Li, Deputy Commissioner of State Administration of Taxation from China. The ratification process for the revised DTA has now been completed and the DTA enters into force on 18 September 2007.

2. With the ratification, the provisions of the revised DTA shall have effect on income derived on or after 1 January 2008. The revised DTA will replace the original agreement that has been in force since 12 December 1986 and subsequently amended by an Exchange of Notes effective as of 1 July 1991.

3. The revised DTA provides for improvements in several of the terms of the existing agreement. Under the revised DTA, withholding tax rate on dividends will be reduced from 7% (for corporate shareholders holding at least 25% of the share capital) and 12% (for other shareholders), to 5% and 10% respectively. The withholding tax rate on lease payments for industrial, commercial or scientific equipment will be reduced from 10% to 6%. In addition, gains from the sales of shares in Chinese companies will be subject to tax in China only if the person making the sale has held at least 25% of the share capital of the company in the past 12 months.

4. The revised DTA will continue to help investors avoid the burden of double taxation of income between Singapore and China. It will further strengthen the economic links between the two countries by facilitating the cross-flow of trade, investment, financial activities and technical know-how and expertise between Singapore and China.

5. The full text of the revised DTA will be published in the Government Gazette tomorrow. It is also available on the website of the Inland Revenue Authority of Singapore at