A foreign company providing services - including consulting services, software or web development services, cloud services, etc. to a company based in Singapore (i.e. a Singapore company or a foreign company with a permanent establishment in Singapore) is in principle subject to a withholding tax of 15% in Singapore. (1)
This withholding tax applies if the service is performed by the foreign company in Singapore. If the service is performed outside of Singapore, and the resulting work product is then sent to Singapore or made available to a Singapore company, then no withholding tax applies.
The withholding tax may be reduced, or even avoided if there is a tax treaty between Singapore and the country of the company providing services.
Singapore has signed several such double taxation avoidance conventions with foreign countries, including France.
A new convention for the avoidance of double taxation between Singapore and France entered into force on 1st June 2016, replacing the previous convention dated 9 September 1974. (2)
For example, for French IT companies providing services to Singapore companies, the application of the double taxation avoidance convention means that, provided that the French service company does not have a permanent establishment in Singapore (as defined in article 5 of the Convention), then the full revenue earned and invoiced by the French service company will be taxed in France and Singapore shall not tax this revenue. The Singapore company paying fees to the French company will not have to apply withholding tax, provided these conditions are met. (3)
Singapore is an important trading partner for France and a growing number of French companies choose Singapore, often as a hub and a gateway to the ASEAN market, to develop their activity into Asia. The renewal of this double tax convention between the two countries should be an incentive for bilateral business relationships to further develop and thrive.
For any specific questions about tax, withholding tax, VAT or GST, we recommend to consult a tax lawyer.
* * * * * * * * * * *
Note: in this short article, we focus on service companies and withholding tax. However, the Convention encompasses many more tax issues, not addressed here.
(1) The applicable rate depends on the service provided and nature of payment. For more details, check the Inland Revenue Authority of Singapore at www.iras.gov.sg
(2) Convention between the Government of the Republic of Singapore and the Government of the French Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, concluded on 15 January 2015 and entered into force on 1st June 2016. The previous convention was concluded on 9 September 1974 and entered into force on 1st August 1975.
(3) See article 7 §1 of the Convention (“Business Profits”)
Bénédicte DELEPORTE
Avocat
Deleporte Wentz Avocat
www.dwavocat.com
June 2016
This withholding tax applies if the service is performed by the foreign company in Singapore. If the service is performed outside of Singapore, and the resulting work product is then sent to Singapore or made available to a Singapore company, then no withholding tax applies.
The withholding tax may be reduced, or even avoided if there is a tax treaty between Singapore and the country of the company providing services.
Singapore has signed several such double taxation avoidance conventions with foreign countries, including France.
A new convention for the avoidance of double taxation between Singapore and France entered into force on 1st June 2016, replacing the previous convention dated 9 September 1974. (2)
For example, for French IT companies providing services to Singapore companies, the application of the double taxation avoidance convention means that, provided that the French service company does not have a permanent establishment in Singapore (as defined in article 5 of the Convention), then the full revenue earned and invoiced by the French service company will be taxed in France and Singapore shall not tax this revenue. The Singapore company paying fees to the French company will not have to apply withholding tax, provided these conditions are met. (3)
Singapore is an important trading partner for France and a growing number of French companies choose Singapore, often as a hub and a gateway to the ASEAN market, to develop their activity into Asia. The renewal of this double tax convention between the two countries should be an incentive for bilateral business relationships to further develop and thrive.
For any specific questions about tax, withholding tax, VAT or GST, we recommend to consult a tax lawyer.
* * * * * * * * * * *
Note: in this short article, we focus on service companies and withholding tax. However, the Convention encompasses many more tax issues, not addressed here.
(1) The applicable rate depends on the service provided and nature of payment. For more details, check the Inland Revenue Authority of Singapore at www.iras.gov.sg
(2) Convention between the Government of the Republic of Singapore and the Government of the French Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, concluded on 15 January 2015 and entered into force on 1st June 2016. The previous convention was concluded on 9 September 1974 and entered into force on 1st August 1975.
(3) See article 7 §1 of the Convention (“Business Profits”)
Bénédicte DELEPORTE
Avocat
Deleporte Wentz Avocat
www.dwavocat.com
June 2016
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