Ratification of The Agreement Between Singapore and Finland for The Avoidance Of Double Taxation and The Prevention of Fiscal Evasion with Respect to Taxes on Income
27 Dec 2002A new Agreement between the Government of the Republic of Singapore and the Government of the Republic of Finland for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income was signed on 7th June 2002. The new Agreement will replace the old Agreement signed on 23rd October 1981.
2 The new Agreement enters into force today, following the completion of ratification formalities. The provisions of the new Agreement shall have effect on income derived on or after 1 January 2003. The provisions of the old Agreement will cease to apply from the effective date of the new Agreement.
3 Under the new Agreement, the rates of withholding tax on interest and royalties will be reduced to 5% from the rate of 10% in the old Agreement. The withholding tax rate on Finnish dividends derived by a Singapore resident company will also be at 5% if the Singapore company directly controls at least 10% of the voting power of the Finnish company. For other cases, the dividend withholding tax rate will be reduced to 10% from 15% in the old Agreement.
4 Singapore will continue, in the new Agreement, to allow tax paid in Finland as credit against Singapore tax on income arising in Finland. In the case of dividends received from Finland, the Finnish tax on that portion of the profits out of which the dividends have been paid will also qualify for tax credit in Singapore if the Singapore company owns at least 10% of the share capital of the Finnish company.
5 Similarly, Finland will also provide relief from double taxation by allowing a credit for Singapore tax paid against Finnish tax on income of her residents. In the case of dividends, Finland will exempt from tax dividends paid by a Singapore resident company to a Finnish resident company which holds directly at least 10% of the voting power in the Singapore resident company.
6 The new Agreement will continue to help investors avoid the burden of double taxation of income between Singapore and Finland and further facilitate the cross-flow of trade, investment, financial activities and technical know-how between the two countries.
7 The full text of the new Agreement will be published in the Government Gazette today. Further enquiries on the new Agreement can be referred to the Inland Revenue Authority of Singapore at telephone number 6351 2122.
MINISTRY OF FINANCE