Singapore-Uzbekistan Avoidance Of Double Taxation Agreement Ratified

Singapore and Uzbekistan signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income ("DTA") in July this year. Following the completion of ratification formalities, Singapore's 59th DTA comes into force on 28 November 2008, and its provisions shall apply to income derived on or after 1 January 2009.

2. The DTA lowers tax barriers and provides more tax certainty to Singapore businesses engaged in cross-border trade and investments with and in Uzbekistan. For example, the furnishing of services in Uzbekistan will constitute a permanent establishment if the activities continue for more than 183 days in any twelve-month period. Also, under the DTA, Singapore tax residents who derive income sourced in Uzbekistan will enjoy withholding tax of 5% for dividends and interest, and 8% for royalty. These are lower than the withholding taxes under Uzbekistan's domestic tax laws of 10% for dividends and interest, and 20% for royalties. To eliminate double taxation, both countries will allow a tax credit for tax paid by their residents on foreign-sourced income.

3. The full text of the DTA will be published in the Government Gazette on 28 November 2008, and will also be available on the Inland Revenue Authority of Singapore's (IRAS) website at www.iras.gov.sg.

MINISTRY OF FINANCE