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Ratification of the Agreement between The Republic Of Singapore and Romania for The Avoidance of Double Taxation and The Prevention of Fiscal Evasion with Respect To Taxes on Income and on Capital

28 Nov 2002

An Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital was signed on 21st February 2002 between the Republic of Singapore and Romania. This Agreement enters into force today following the completion of ratification formalities. The provisions of this Agreement shall have effect on income derived on or after 1st January 2003.

2 The Agreement provides a framework that encourages greater cross-border flow of trade, investment, technical know-how and expertise between Singapore and Romania thereby strengthening bilateral links between the 2 countries. The Agreement spells out the taxing rights of each country on all forms of income and provides for the elimination of double taxation on income which may occur as a result of cross-border economic activities between the 2 countries.

3 Furthermore, the Agreement provides for the exemption or reduction of tax in the country of source on various types of income derived by a resident 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 Romania as a credit against Singapore tax on income arising from Romania. For a Singapore company receiving dividends from Romania, the Romanian tax on that portion of the profits out of which the dividends were paid would also qualify for tax credit in Singapore if the Singapore company were to own at least 10% of the share capital of the Romanian company.

5 The full text of the Agreement is published in the Government Gazette today. With this Agreement coming into force, Singapore will have in force comprehensive Avoidance of Double Taxation Agreement with 45 countries. Further enquiries regarding the Agreement may be directed to the Inland Revenue Authority of Singapore at 6351 2122.