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The Cyprus-Singapore double taxation agreement
Cyprus added Singapore to its list of double taxation agreements in 2000. The double taxation agreement covers in the income taxes levied in Cyprus and Singapore and also contains provisions about the prevention of fiscal evasion. The taxes covered by the Cyprus-Singapore double taxation convention are:
- the Singapore income tax,
- the Cypriot corporate tax, income tax, capital gains tax and defense tax.
The agreement will also apply to any similar taxes in both countries, and each state will notify the other about any changes brought to its taxation system. The agreement applies to all Singapore and Cypriot citizens, residents and companies.
What does the Cyprus-Singapore double taxation treaty define?
The double taxation agreement Cyprus signed with Singapore defines important terms such as both countries’ territories, what permanent establishments are and how they will be taxed according to the convention, the terms “person” and “company” and the term “resident of a contracting state”. The agreement also establishes that incomes resulted from the alienation of immovable property will be taxed the country the property is located in, while business profits will be taxed in the country the company is incorporated in. However, Cypriot subsidiaries or branch offices will be taxed in Singapore for the income resulted from business activities carried out in Singapore.
With respect to the taxation of dividends in Cyprus and Singapore, the double taxation agreement provisions the dividends paid by a company may be taxed in the beneficial owner’s resident country.
Tax rates according to the Cyprus-Singapore double tax treaty
The agreement provisions the following tax rates:
- interests will be taxed at 7% rate of the gross amount if they are received by a Singapore or Cypriot bank or financial institution,
- 10% in all other cases.
Interests will be exempt from taxation if they are received by the Government or any institution or company owned by the Government in Cyprus. In the case of Singapore, interests are exempt from taxation if they are received by the Government and the Monetary Authority of Singapore.
For detailed information about the elimination of double taxation in the two contracting states, please contact our Cypriot law firm.