Singaporean – Ecuadorian DTA entered into force
On December 18, 2015 the Inland Revenue Authority of Singapore issued a press release announcing that on that same date the Agreement between the Government of the Republic of Singapore and the Government of the Republic of Ecuador for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Hereafter: the DTA) entered into force.
Based on Article 28, Paragraph 2 of the DTA (“ENTRY INTO FORCE”) this means that the provisions of the DTA shall have effect:
(a) in Singapore:
(i) in respect of taxes withheld at source on amounts liable to be paid, deemed paid or paid (whichever is the earliest) on or after January 1, 2016; and
(ii) in respect of tax chargeable (other than taxes withheld at source) for any year of assessment beginning on or after January 1, 2017.
(b) in Ecuador:
in respect of taxes on income obtained and amounts to be paid, credited to account, make available or recorded as an expense, from January 1, 2016.
(c) in Singapore and in Ecuador:
in respect of Article 25 (Exchange of Information), for requests made on or after the date of entry into force concerning information for taxes relating to taxable periods beginning on or after January 1, 2016; or where there is no taxable period, for all charges to tax arising on or after January 1, 2016.
Below we will highlight some of the provisions included in the DTA.
Article 5, Paragraph 3 of the DTA (“PERMANENT ESTABLISHMENT”) arranges that the term “permanent establishment” also encompasses:
(a) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only if such site, project or activities last more than 9 months;
(b) the furnishing of services, including consultancy services, by an enterprise of a Contracting State through employees or other personnel engaged by the enterprise for such purpose, but only if activities of that nature continue (for the same or a connected project) within the other Contracting State for a period or periods aggregating more than 183 days in any twelve-month period commencing or ending in the fiscal year concerned.
Article 10, Paragraph 2 of the DTA (“DIVIDENDS”) maximizes the withholding tax a Source State is allowed to withhold over dividend distributions to 5 per cent of the gross amount of the dividends if the beneficial owner of the dividends is a resident of the other Contracting State.
Article 11, Paragraph 2 of the DTA (“INTEREST”) maximizes the withholding tax a Source State is allowed to withhold over interest payments to 10 per cent of the gross amount of the interest if the beneficial owner of the interest is a resident of the other Contracting State.
Article 12, Paragraph 2 of the DTA (“ROYALTIES”) maximizes the withholding tax a Source State is allowed to withhold over royalties to 10 per cent of the gross amount of the royalties. if the beneficial owner of the royalties is a resident of the other Contracting State.
Click here to be forwarded to the DTA as available on the website of the Inland Revenue Authority of Singapore, which will open in a new window.
Are you looking for an other DTA? Then check our section DTAs & TIEAs, a very efficient way to locate numerous DTAs.