• Hong Kong
  • UK
  1. Osome Blog Singapore
  2. How To Avoid Double Taxation in Singapore

How To Avoid Double Taxation in Singapore

If you are a tax resident of Singapore, have set up businesses beyond Singapore and have paid taxes in other countries, your income might not be double taxed in Singapore. This is because Singapore's tax framework advocates fairness by ensuring that cross-border trade will not be penalised by double taxation, which could be detrimental to international business.

Read on to find out more about double taxation and how you can avoid it in Singapore.

What Is Double Taxation?

Double taxation is when 2 countries impose tax on the same taxpayer, and in this context, it refers to a business. In other words, the company’s income is being taxed twice, with the first source from the country where income is generated, and the second being the country of residence where payment is made. The second-mentioned is typically the home country, or where the business is from.

Through domestic tax laws or tax treaties with other countries to avoid double taxation, countries can offer different tax relief types.

Avoiding Double Taxation Through Double Tax Treaties

What Is the Double Tax Agreement (DTA)?

The double tax treaties, also known as Double Tax Agreement (DTA), one agreed upon between two countries to avoid double taxation that result from the domestic tax laws.

Advantages of the Double Tax Agreement (DTA)

DTA is implemented to clearly detail when and how tax is imposed in the country where income arises, or where payment is received. In a nutshell, it provides clear guidance on the respective country's taxing right, from the country of origin and the country where the business has expanded to.

DTA can also counteract international tax evasion by prohibiting the exchange of information between the tax authorities and contracting state. Additionally, you can also claim tax relief for tax paid overseas.

What Types of Income Would Go Through Double Taxation?

Double taxation may occur if you earn incomes from the following:

  • Business profits
  • Shipping and air transport
  • Associated enterprises
  • Income from immovable property
  • Interest
  • Dividends
  • Capital gains
  • Royalties and fees for technical services
  • Dependent personal services
  • Independent personal services
  • Directors' fees
  • Sports persons
  • Artistes
  • Non-governmental pensions and annuities
  • Remuneration and pensions from government service
  • Researchers and teachers
  • Trainees and students
  • Government income

Who Can Benefit From Double Tax Treaties

Only tax resident companies of Singapore can reap the benefits of a double tax agreement application.

Under the Singapore Income Tax Act, a resident is recognised as:

  • A body of persons or a company: This means that a body of persons or a company is in control and manages the business that is in Singapore

When you receive earnings from a treaty country, you are eligible to file for tax relief under the relevant tax treaty. To do so, you will have to submit a Certificate of Residence as proof of your Singapore Tax Residency to the foreign country.

How to Relieve Double Taxation in Singapore?

If you are thinking of expanding beyond Singapore but worried about double taxation, fret not as Singapore has double taxation treaties put into place to ensure that you won’t be taxed twice. Your company can claim foreign tax credit (FTC) for tax paid in a foreign jurisdiction against the Singapore tax payable on the same income.

There are 2 ways you can claim foreign tax credit and avoid double taxation.

  1. Unilateral Tax Credit (UTC)

As of 2009, a Unilateral Tax Credit (UTC) will be permitted for all foreign income received in Singapore by local tax residents from territories that do not have the Double Taxation Agreement with Singapore.

  1. Double Tax Relief (DTR)

A Double Tax Relief (DTR) is a relief provided in the form of a tax credit to relieve double taxation. It allows you as a local tax resident to claim the credit on the tax amount paid in foreign territory against the Singapore tax that is owed on the same income. If the foreign tax was made according to the Double Taxation Agreement and is limited to the lower of the foreign tax paid and the Singapore tax that would have been due on the same income, a DTR will be approved.

Qualifying Conditions to Claim FTC

Of course, there are conditions you have to fulfill:

  1. Your company is a Singaporean tax resident for the relevant basis year
  2. This income is subjected to Singapore taxation
  3. The tax has been made or is due on the same income in foreign territory

On top of the above, there are exceptions. Do refer to the table below to check if your company is in the following positions:

Company Position Consequence
In a financial loss position Unfortunately, if your company is in a loss position, no FTC will be granted.
With permanent establishments overseas If your company has an overseas permanent establishment and your foreign income is made through this permanent establishment, this income will usually be taxed overseas. As such, a FTC will only be given if the income is also taxed in Singapore.
Making passive income Making passive income (e.g. dividend, interest) from outside Singapore will typically be taxed in foreign territory in the year of receipt. This income will be taxed in Singapore in the year of remittance, and a FTC will be granted when the income is being taxed in Singapore.

How to Claim FTC

You should file your FTC claim when you file Form C of your Income Tax Return. If you are claiming FTC, take note that you cannot use Form C-S.

Documents supporting your FTC claim do not have to be submitted with your Form C. You’ll need to prepare the following documents for your company

  1. Territory in which foreign tax was paid
  2. Description of rendered services, and if the income was made through a permanent establishment in the foreign territory and your basis for this claim (if applicable)
  3. Nature of income
  4. Payer’s name
  5. Gross income, withholding tax rate and amount of tax withheld in foreign currency (alongside the corresponding S$ amount)
  6. Date of withholding tax receipt/ voucher
  7. Withholding tax receipt/ voucher
  8. For double tax relief claim, the applicable Article of the Double Taxation Agreement under which the tax was withheld

Tax Exemption of Foreign Income

As a tax resident company in Singapore, you can enjoy tax exemption on foreign income remitted into Singapore.

Types of foreign income

The three specific types of foreign income include:
1. Foreign branch profits
2. Foreign-sourced dividends
3. Foreign-sourced service income

Meet These Conditions to Qualify for Tax Exemptions

The tax exemption will be permitted when all of the following conditions are fulfilled:

  1. The Comptroller is convinced that the tax exemption would be advantageous to the person residing in Singapore.
  2. The highest corporate tax rate of the foreign territory from which the income is made is at least 15% at the time the foreign income is paid in Singapore
  3. The foreign income had been subjected to tax in the foreign territory from which they were made. The rate at which the foreign income was taxed can differ from the headline tax rate

How to Apply for Tax Exemption

Provide the required information in Form C of your Income Tax Return:

  • Territory from which the income is received
  • Nature and amount of received income
  • Headline tax rate of the foreign jurisdiction
  • Confirmation that foreign tax has been made in the territory from which the income was paid to satisfy the "subject to tax" condition.

If you are filing Form C-S and not Form C, you should include the above information in your company's tax computation and keep hold of any supporting information.

Need Support With Your Taxes?


Leave it to us! We file your accounting reports painlessly, with a chartered Accountant in Singapore who will review your books, help receive reliefs and exemptions, compile reports and file them on time.

We advise what tax exemptions and tax reliefs your company is entitled to, and we organise your reports exactly the way needed to comply.

Share this post:

Tips to run your business smarter.
Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

You might like it


When Should I Hire An Accountant For My E-commerce Store in Singapore?

Starting an online business is an exciting journey. According to the Singapore Department of Statistics, online retail sales made up 15.2% of the retail trade in September 2021.


How To Upsell to Your E-commerce Customers

We are inundated daily with countless ads throughout our day, both online and offline. As an e-commerce store retailer, one of the challenges that you may face is trying to get your products and message across to prospective customers.


Types of Business Models for E-commerce

If you are planning to start a new e-commerce business venture, this is the best time to do it! For seasoned business owners who are thinking of diversifying their business into e-commerce, you are at the right place.


An E-commerce’s Checklist To Prepare for 2021 Holiday Sales

Although the sales period will mean that your customers’ shopping carts will be busier, this also brings about its own set of challenges for your online business. Follow our holiday season checklist to ensure your business is well equipped for the shopper surge.


What Important Records Must I Keep As A New Business Owner?

Good business record keeping is crucial, from managing costs for legal, regulatory or tax reasons to simply managing and improving your business. If you are just starting up your business, it might not be the first thing that comes to your mind, but it can help you build a strong foundation.

Running My Business

3 Things To Consider Before Renting Your First Office Space

If you have always been working from home for your small business and are contemplating moving to a bigger space to accommodate your staff and to have a central office location, you may be looking out for office spaces to rent.


Digital Payment Trends For E-commerce Sellers To Know

Today, consumers are switching from traditional payment methods, such as cash, cheque and cards to digital payment. The global pandemic has fuelled this unprecedented shift in the consumer’s behaviour.


Creating an Invoice When Selling on Amazon

This article helps Amazon sellers who are finding out how to create, access and share invoices on Amazon.


12 Ways To Drive More Traffic to Your Online Store

When your website is finally live, you want to share it with as many people as possible. How do you get people to your website and excited about your products and shop from your store?

Government Grant

Wage Support & Rental Relief for Businesses in Singapore’s Stabilisation Phase

Tighter COVID-19 restrictions will be implemented from 27 September to 21 November 2021. Find out what support SG companies can receive from this Stabilisation Phase.


A Design Guide for E-commerce Websites

If you’re looking to improve your e-commerce page and improve sales, you might want to learn the fundamentals of how to design a good website.

Entrepreneur's Bootcamp

Best Practice Invoicing Tips for SMEs

This article will help Singapore-based SMEs get to grips with the best invoicing practices. Take a look at the tips and how-tos to guide you toward being more streamlined and savvy.

Tips to run your business smarter. Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

We’re using cookies! What does it mean?