International Tax

Singapore does not condone cross-border tax evasion and profit shifting.

• Singapore adopts internationally accepted transfer pricing guidelines. Businesses are to adopt these guidelines and ensure that profits allocated are commensurate with the associated functions, assets and risks in Singapore. Our laws require businesses to maintain contemporaneous records to demonstrate their compliance with the transfer pricing guidelines. Singapore also runs a well-established programme for multilateral and bilateral advance pricing agreements with our treaty partners to ensure that transactions of businesses with related parties are priced in accordance with the Arm’s Length Principle.

• As a member of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS), the multilateral body that sets internationally agreed standards to combat BEPS and assesses jurisdictions’ implementation of these standards, Singapore actively works with other jurisdictions, the OECD and the G20 to counter BEPS. Coordinated global efforts based on sound principles are important for a common set of rules to be applied across jurisdictions, to ensure a level playing field so that jurisdictions, large or small, developed or developing, can compete fairly based on their fundamental advantages and businesses can continue to innovate and grow. This also ensures certainty of international taxation rules for cross-border transactions, so as to avoid double taxation and promote global growth:

• Singapore has implemented all the internationally agreed standards for combating BEPS. Singapore’s implementation of these standards is reviewed by the Inclusive Framework  on BEPS. For instance, our tax incentive schemes have been assessed by the Forum on Harmful Tax Practices (FHTP) as compliant with internationally agreed standards for countering harmful tax practices.

• Singapore has signed and ratified the multilateral agreements developed by the Inclusive Framework on BEPS:
  

• The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI), which updates Singapore’s tax treaties with the internationally agreed standards to counter treaty abuse and improve dispute resolution. More information can be found on the Inland Revenue Authority of Singapore’s (IRAS) website here.

• The Multilateral Competent Authority Agreement on the Exchange of Country-by-Country (CbC) reports. More information can be found on IRAS’ website here.
  

Internationally-agreed Standards for Exchange of Information (EOI)

• Singapore abides by the internationally agreed standards for Exchange of Information (EOI) for tax transparency. Singapore is a member of the Global Forum on Transparency and Exchange of Information for Tax purposes (Global Forum), the multilateral body working on the effective implementation of internationally agreed standards for tax transparency. 

• Singapore endorsed the internationally-agreed Standard for Exchange of Information (EOI Standard) in 2009. The EOI Standard sets out how tax jurisdictions should address cross-border tax evasion by entering into effective information sharing arrangements. Since 2009, Singapore has been updating and increasing its network of treaties to be in line with the EOI Standard. In line with developments in international standards and practices, Singapore made further changes in 2013 (details in this press release) to strengthen our EOI regime.

• Singapore’s exchange of information upon request regime has been rated as compliant with international tax transparency standards by the Global Forum. This is the highest overall rating a jurisdiction can receive. Please refer to this link for more information.

• In 2014, Singapore, along with other major financial centres, committed to implement the Common Reporting Standard (CRS) for the automatic exchange of financial account information (AEOI) by 2018, after it has been endorsed by the G20 as a new global standard. The CRS sets out the financial account information to be exchanged, the financial institutions (“FIs”) required to report, the different types of accounts and taxpayers covered, as well as the customer due diligence procedures to be followed by the FIs. 

• Singapore's implementation of AEOI is guided by the following principles:
  

1. Singapore will implement AEOI if it is adopted in all key financial centres in Europe and Asia, to avoid regulatory arbitrage;

2. AEOI also needs to be done within a robust framework of law to protect taxpayer confidentiality and ensure that the information is used properly. This is particularly important as AEOI entails the transmission of sensitive taxpayer information which should be safeguarded; and

3. There is reciprocity with any future AEOI partners in terms of information exchanged. 

• Singapore has signed and ratified the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account information under the Common Reporting Standard (further information can be found here), and published regulations to implement the CRS. In September 2018, Singapore commenced AEOI with over 60 jurisdictions, and has since activated AEOI relationships with more than 100 jurisdictions. 
  

Regulations on the Standard for the Automatic Exchange of Financial Account Information in Tax Matters"

• The Income Tax (International Tax Compliance Agreements) (Common Reporting Standard) Regulations 2016 (Regulations) were published on 2 December 2016. A copy of the Regulations and further information can be found on IRAS’ website here.

• The Regulations incorporates the Common Reporting Standard (CRS) for the automatic exchange of financial account information with effect from 1 January 2017 under Singapore’s domestic legislative framework, and require all financial institutions to put in place necessary processes and systems to collect CRS information from all non-Singapore tax resident account holders (known as the “Wider Approach”) from 1 January 2017. 

• More than 100 jurisdictions, including major financial centres such as Hong Kong, Luxembourg and Switzerland, have endorsed the CRS and have commenced AEOI. 
  

Singapore-US Foreign Account Tax Compliance Act Intergovernmental Agreement and Regulations

• The agreement reached between Singapore and the US to improve international tax compliance and to implement the Foreign Account Tax Compliance Act (FATCA) (the Singapore-US FATCA Agreement) and the Regulations to incorporate the agreement into Singapore’s domestic legislative framework entered into force on 18 March 2015. The updated Singapore-US FATCA Agreement and the Regulations entered into force on 1 January 2021.

• FATCA is a US law which targets non-compliance with tax laws by US persons using non-US accounts. Under FATCA, all financial institutions outside of the US are required to regularly submit information on financial accounts held by US persons to the US Internal Revenue Service (IRS) or be subject to withholding tax on certain payments. The Singapore-US FATCA Agreement facilitates Singapore-based financial institutions’ compliance with FATCA, by allowing them to fulfil their reporting obligations through the IRAS instead of reporting directly to the US IRS.

• A copy of the agreement, the Regulations and further information can be found on IRAS’ website here. 

The Multilateral Convention on Mutual Administrative Assistance in Tax Matters (Convention)

• Singapore became a signatory of the Convention on 29 May 2013. The Convention was first developed as an OECD-Council of Europe agreement in 1988. It was opened to non-members in 2010 and covers several areas of cooperation, including EOI upon request, spontaneous EOI and AEOI.

• Singapore deposited its instrument of ratification for the Convention on 20 January 2016. The press release on Singapore’s ratification can be accessed here, and more information can also be found here.
  

Singapore’s Avoidance of Double Taxation Agreements (DTAs)

DTAs help to promote bilateral investment and trade flows. Through the provisions of a DTA, taxpayers engaged in cross-border business can enjoy certainty on the taxing rights of either jurisdiction, benefit from the elimination of double taxation, and gain access to a platform to settle tax disputes.

Singapore has an extensive network of DTAs. The full list of Singapore’s DTAs can be found on IRAS’ website here.

Frequently Asked Questions (FAQs) on DTAs

1.  What is a DTA?

A DTA is a bilateral agreement which provides clarity on the taxing rights of each contracting jurisdiction on all forms of bilateral income flows. The DTA also seeks to eliminate instances of double taxation which can arise from cross-border trade and investment activities. Usually, there would be provisions in the DTA for the reduction or exemption of tax at source on certain types of cross-border incomes such as interest and royalties.

2.  How are DTAs negotiated?

As with all bilateral treaties, there needs to be mutual interest from both jurisdictions before negotiations can commence. While it is expected for each jurisdiction to push for terms that best serve its interests, compromises would have to be made to achieve an overall balance of benefits. Both sides may require more than one round of negotiations to resolve all outstanding issues and finalise the terms of the DTA. 

Upon the conclusion of negotiations, both jurisdictions would arrange for the DTA to be signed by the relevant authorities. Following the signing, both jurisdictions would have to ratify the DTA in accordance with their domestic law before it enters into force.

3.  How do I seek assistance if I encounter a problem relating to the application of a particular DTA?

The Mutual Agreement Procedure (MAP) Article of a DTA sets out the process to resolve issues relating to the application of the DTA.

Taxpayers who wish to take up their issues under the MAP should approach the tax authority of the State in which they are a tax resident.

More information on the MAP can be found on IRAS’ website here.

4.  What is the Multilateral convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI)?

The MLI allows jurisdictions to swiftly amend their DTAs to implement the internationally agreed tax treaty-related Base Erosion and Profit Shifting (BEPS) standards to counter treaty abuse. The MLI also improves the dispute resolution mechanisms in DTAs.

In line with Singapore's commitment to implement these internationally-agreed standards, Singapore signed and ratified the MLI on 7 June 2017 and 21 December 2018 respectively. The MLI entered into force for Singapore on 1 April 2019. 

More information on the MLI can be found on IRAS’ website here.