Without the DBA, these incomes are doubly taxed, i.e. two countries collect their own taxes on the same income. This double taxation unfairly penalizes income flows between countries, thus discouraging trade and trade between countries. The annexed agreement between the Government of the Republic of India and the Government of the Republic of Singapore on the prevention of double taxation and the prevention of income tax evasion came into force on 27 May 1994, in which the two States Parties notified each other of the completion of the procedures under their respective law. , as requested by the above-mentioned agreement: in order to avoid misuse of this exemption, particularly by residents of third countries who set up holding companies in Singapore to benefit from the income exemption, a clause “Limitation of Benefits (LOB) ” was added in the contract. Under this clause, a Singapore company entitled to a shareholding in the company is not entitled to the exemption from social capital gains if the sole purpose of the company`s incorporation was to benefit from this benefit. In addition, companies with only a negligible business in Singapore and no continuity in their operations are not entitled to this benefit. Under the LOB clause, the agreement does not apply to shell companies. Income Tax Act, 1961: Communication by Section 90: Agreement between the Government of the Republic of India and the Government of the Republic of Singapore to avoid double taxation and prevention of tax evasion with respect to income tax The Double Taxation Convention (DBA) between India and Singapore is a tax treaty between two countries to avoid double taxation of income that can flow between the two countries. This article contains a brief analysis of the DBA (DTA) between Singapore and India.
Keep in mind that the information provided is only used to provide general advice and is not intended to replace professional advice. A DBA between Singapore and another jurisdiction is intended to avoid double taxation of income collected by a resident of the other jurisdiction in a jurisdiction. A DBA also highlights tax duties between Singapore and its contractor on different types of income from cross-border economic activities between the two jurisdictions. The agreements also provide for a reduction or exemption from tax on certain types of income. If Singapore and India do not have a DBA in force, the company`s profits could be taxed in both Singapore and India. In such a case, the profits of the establishment would bear twice the tax burden. This underlines the importance of the DBA and how it avoids double taxation of corporate profits. C orntries around the world enter into different tax treaties.
These contracts are beneficial to residents (commercial and individual units) of the countries parties to the agreement.