Singapore – Malaysia Double Tax Treaty

Updated on December 1,2016
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Singapore – Malaysia Double Tax Treaty
Singapore and Malaysia have concluded a double tax treaty, an agreement that allows for the avoidance of double taxation and at the same time, it serves as an instrument for preventing fiscal evasion. The treaty was entered into force in 2006 and it is one of the double tax treaties (DTA) signed by Singapore with other countries.

Foreign investors from Malaysia in Singapore and vice versa benefit from the provisions of the treaty. The document allows for special treaty rates for the applicable withholding taxes.

Investors who want to know how their branch in Singapore can benefit from the provisions of the double tax treaty can request the services offered by an accountant in Singapore.

Taxes covered by the treaty

The double tax treaty between Singapore and Malaysia covers the taxes in income. In the case of Singapore this is the income tax and in the case of Malaysia, the taxes are the income tax and the petroleum income tax. The agreement also applies to any identical taxes or similar ones imposed after the signature date of the treaty. The two countries must inform one another of any relevant changes in their taxation regime. 

Taxation in both jurisdictions is made based on the company’s place of residence. For the purpose of the double tax agreement between Singapore and Malaysia, the permanent establishment is considered a branch, an office, a factory or workshop or an otherwise different place of management. 

One of our accountants in Singapore can give you complete information about the treaty’s provisions in respect to the taxation of business profits, income from immovable property, pensions, director’s fees or others.

Tax reductions available under the DTA

The double tax treaty applies to companies that are residents (are incorporated) in one or both of the contracting states. Under the DTA, the withholding tax rate for interest is 10% (while normally it would be 15%) and the withholding tax on royalties is 8% (usually it would be 10%). Technical fees are taxed under the treaty at a rate of 5%.

A reduced dividend payment tax is available for payments made by a company from one state to another company from the other state. The lowest rate of 5% applies if the company receiving the dividends holds at least 25% of the capital in the company making the payment.

Investors who solicit our accounting services in Singapore can also be informed of any tax changes and calculations under a double tax treaty/

You can contact us if you need the services provided by an accountant in Singapore