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Singapore-Belgium New Avoidance Of Double Taxation Agreement Ratified

26 Nov 2008

Singapore and Belgium signed a new Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income ("DTA") on 6 November 2006. This new DTA enters into force on 27 November 2008 following the completion of ratification formalities.

2. The new DTA will replace the current treaty which has been in force since 1973, and shall apply to income derived on or after 1 January 2009. With the improved provisions under the new DTA, Singapore businesses will face lower tax barriers and enjoy tax certainty in their cross-border trade and investments in Belgium, and vice versa.

3. The improved terms under the new DTA include the following:

a) A building site, a construction, installation or assembly project, or supervisory activities connected therewith, constitutes a permanent establishment only if it lasts more than 12 months. Previously, the period threshold was 6 months. The period threshold for the furnishing of services has also increased from 90 days to 183 days in any twelve-month period.

b) The withholding tax rates on (a) interest and (b) lease payments for industrial, commercial or scientific equipment will be reduced from 10% and 5% to 5% and 3% respectively. For dividends, the following withholding tax rates will apply:

i) Exempt (for corporate shareholders holding at least 25% of the share capital for at least 12 months);

ii) 5% (for corporate shareholders holding at least 10% of the share capital); and

iii) 15% (for other shareholders)

4. The full text of the DTA will be published in the Government Gazette on 27 November 2008, and will also be available on the Inland Revenue Authority of Singapore's (IRAS) website at