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Singapore and Bahrain to avoid Double Taxation

31 Dec 2004

Singapore and Bahrain signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income ("the Comprehensive Agreement") on 18 February 2004. The Comprehensive Agreement enters into force today and its provisions take effect in Singapore in respect of Singapore tax from the Year of Assessment 2006.

2 The Comprehensive 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 two countries.

3 Furthermore, the Comprehensive Agreement provides for mutual exemption or reduction of tax on various types of income derived by a resident of treaty partner, 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 exemption from tax in the country of source on dividends; and

c) the reduction of source country tax on interest and royalties.

4 Prior to the conclusion of this Comprehensive Agreement, Singapore and Bahrain have already agreed not to double tax income from operating aircraft in international traffic. The provisions of the Agreement for Reciprocal Exemption with respect to Taxes on Income arising from the Business of International Air Transport will continue to be applicable to income not covered in the Comprehensive Agreement.

5 Together with this Comprehensive Agreement, Singapore now has in force comprehensive Avoidance of Double Taxation Agreements with 50 countries. The full text of the Comprehensive Agreement is published in the Government Gazette ( and is also available on the Inland Revenue Authority of Singapore's (IRAS) website at