The claimable exemptions under Avoidance of Double Taxation Agreements (DTA)

In the realm of international taxation, Double Taxation Agreements (DTAs) serve as crucial tools to alleviate the issue of juridical double taxation, which occurs when the same income is subject to taxation twice—initially in the jurisdiction where it is generated and subsequently in the jurisdiction where it is received.

Jurisdictions engage in DTAs to mitigate the adverse consequences of such double taxation. A DTA partner denotes a jurisdiction that has formally entered into a DTA with Singapore. It’s important to note that only individuals or entities classified as tax residents of Singapore and the respective DTA partner jurisdiction can avail themselves of the advantages outlined in a DTA.

Benefits derived from DTAs can vary significantly based on the specific provisions contained within each agreement. These benefits often encompass exemptions from income taxation for individuals engaged in various professions, including personal services, teaching, research, artistry, athletics, students, trainees, and more.

As the details of each DTA can diverge, it is essential to consistently reference the explicit provisions within the relevant DTA when interpreting and applying its terms.

For individuals who are tax residents of jurisdictions that have established a DTA with Singapore, there exists protection against being subjected to double taxation on the same income within Singapore’s jurisdiction.

Specifically, with regard to short-term employment income earned in Singapore, the DTA article pertaining to ‘Dependent Personal Services’ prescribes the rules regarding income sourced from employment. Typically, the source state, in this case, Singapore, is where the services are performed or the employment is conducted. To facilitate the mobility of qualified personnel engaged in short-term employment, the source state grants tax exemptions.

These exemptions typically apply under the following conditions, which are present in most DTAs:

Employment is carried out in the source state for a duration less than a specified period, often set at 183 days within a 12-month period.
The employer is not considered a resident of the source state.
The income is neither paid by nor attributed to a permanent establishment or fixed base of the employer in the source state.

To ascertain your eligibility for DTA exemption, please utilize the DTA Calculator – Dependent Services provided by IRAS. If you qualify for DTA exemption, you should submit the Claim for DTA Exemption and Certificate of Residence to IRAS. For a more efficient processing of any anticipated refunds, we recommend registering for PayNow FIN.

For additional information related to working for foreign employers, please refer to relevant examples and guidelines.

For tax residents of Singapore who earn income in another jurisdiction, it is possible to be subject to taxation in that specific jurisdiction. However, you can leverage DTA benefits that offer Singapore tax residents the opportunity to access reduced tax rates or tax exemptions within that jurisdiction.

To avail yourself of these benefits, you must submit the Certificate of Residency (COR) to the foreign tax authority as evidence of your Singapore tax residency.

The application process for the Certificate of Residence involves obtaining a letter certifying your tax residency status in Singapore, which is instrumental in claiming benefits under the DTA.

If you are looking for advice or assistance on DTAs, do contact us via email at [email protected].

When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.

Yours Sincerely,
The editorial team at Singapore Secretary Services

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