Guide to Double Taxation in Singapore
- Published: 31 October 2025
- 12 min read
- Grow Your Business, Running a Business, Tax & GST
Ruth Dsouza
Author
Ruth Dsouza Prabhu is a content developer with a passion for turning ideas into clear, engaging narratives. With a strong background in marketing communications and lifestyle writing, she simplifies complex business topics for entrepreneurs. Her work spans strategy, storytelling, and thought leadership, always focused on clarity, credibility, and impact.
Imran Marican
Reviewer
Imran Marican, ATA SCTP member, is our Corporate Tax Assistant Manager based in Singapore, with almost a decade of experience in Singapore corporate tax. With in-depth knowledge of Singapore corporate tax law and regulations, he can help with corporate tax compliance that matters to every company. While our business writers transform complicated tax jargon into easy-to-understand concepts, as a reviewer for the Osome blog, Imran ensures our content is accurate and relevant, helping our readers boost their businesses with helpful tips and insights.
Double taxation occurs when some worldwide income is taxed in two countries separately, regardless of whether the income is earned in Singapore and taxed abroad, or earned overseas and taxed again in Singapore, depending on the company’s structure and tax residency. In this article, we’ll explain what double taxation is, why it happens, and how Double Taxation Agreements (DTAs) can help. Understanding double taxation is critical for effective tax management.
Key Takeaways
- Double taxation refers to the situation where the same income is taxed at both the corporate and personal levels, particularly in cross-border scenarios, necessitating a clear understanding of its causes and impacts.
- Double Taxation Agreements (DTAs) provide frameworks for allocating taxing rights between countries, reducing tax burdens, and promoting international trade, while allowing eligible taxpayers to claim benefits through certificates of residence.
- Taxpayers can mitigate double taxation risks through various strategies, including the use of foreign tax credits, careful tax planning, and structuring investments to take advantage of favorable tax treaties.
What is Double Taxation?
Double taxation occurs when someone pays income tax on both corporate and personal levels within a single or multiple jurisdictions. For domestic income taxes, this happens when a company pays corporate tax on its profits.
In an international context, double taxation arises when income earned abroad is taxed in both the country of origin and the country of residence upon repatriation. This often affects individuals and businesses with cross-border income streams. Singapore operates a territorial tax system, which may result in foreign-sourced income being taxed if remitted back to Singapore.
Understanding how double taxation works is crucial for identifying ways to mitigate its impact through relief mechanisms such as Double Taxation Agreements (DTAs) and foreign tax credits.
Dealing with cross-border income can get complex. Osome’s accounting experts help you navigate Double Taxation Agreements (DTAs) and foreign tax credits, ensuring your business stays compliant while minimising unnecessary burdens. Let us handle the numbers so you can focus on expansion.
Understanding Double Taxation Agreements (DTAs)
Double Taxation Agreements (DTAs) are bilateral treaties that:
- Allocate taxing rights between two treaty countries to avoid double taxation.
- Grants double tax relief and promotes cross border trade and investment by providing clear guidelines on how income will be taxed in each jurisdiction.
- Facilitate international trade by limiting tax obligations or creating tax shelters on corporate profits for businesses operating across borders.
- Reduce the overall tax burden on taxpayers, as outlined in the double taxation treaty. Additionally, double taxation avoidance agreements help clarify these arrangements.
These agreements often provideexemptions or reduced tax rates on various types of income, including royalties, dividends, and interests, thereby making cross-border business operations more viable and attractive.
DTAs operate by reducing or eliminating tax liabilities in one jurisdiction, ensuring that income is not taxed in more than one country.
Benefits of DTAs
Here is a look at the benefits of double tax agreements that businesses can avail of:
- For Singapore tax residents, these agreements can reduce tax rates or completely avoid double taxation on specific types of income.
- Tax relief occurs in the form of reduced withholding tax rates on dividends, interest, and royalties due to DTA provisions.
- Companies in Singapore can claim tax relief, such as exemptions on corporate tax on foreign income derived from jurisdictions with a DTA.
These benefits significantly reduce the tax burden on individuals and businesses engaged in cross-border trade, making relevant DTA a crucial component of global financial planning.
Income Types Covered by DTAs
DTAs cover various types of income to help avoid double taxation on income earned between the home country and the foreign country.
Type of Income | Taxation Rule under DTA |
|---|---|
| Income from immovable property | Taxed in the particular country where the property is situated. |
| Business profits | Taxed under the foreign tax authority only if they are linked to a permanent establishment there. |
| Shipping and air transport | Generally taxed in the country where the operator is a tax resident, unless the activities take place solely in a foreign country. |
| Dividends, interest & royalties | Foreign sourced dividend payments, such as stock ownership, are taxed in the source country, typically through withholding tax on the remittance. |
| Capital gains | Usually taxed in the country where the gains arise. Singapore does not impose capital gains tax; taxation often falls to the shareholder’s country of residence. |
| Personal & professional services | Taxed according to the individual's tax resident location, unless the services are rendered under the foreign tax authority. |
| Directors’ fees | Taxed in the company’s country of residence, where the directorship is held. |
| Artists and sportspersons | Taxed in the country where the performance or event takes place. |
How to Claim DTA Benefits?
Claiming DTA benefits involves a few clear steps to ensure you meet the eligibility requirements and file the right documents on time.
- Check your eligibility: Determine whether you qualify for Double Taxation Relief (DTR) under a DTA.
- Use a DTA Calculator:Assess your eligibility for DTA exemption based on your specific situation.
- Obtain a Tax Residency Certificate (TRC): This certificate is often required to validate your eligibility.
- Submit supporting documents: Ensure the TRC and other required documents are filed with the relevant tax authority by the prescribed due date.
Tax Residency Rules to Know
Tax residency is crucial for determining eligibility for tax exemptions and relief under double taxation agreements.
Key points about a company’s tax residency status include:
- It is determined by the location of its effective management and control.
- It is not solely based on the place of incorporation.
- The ‘control and management’ concept refers to where strategic decision-making occurs.
- This is often indicated by the venues of board meetings, especially for a tax resident.
Virtual board meetings may be considered held in Singapore if a majority of directors are physically present in the country. A company can prove its residency in Singapore through the minutes of the Board of Directors (BoD) meetings held in Singapore.
Companies incorporated outside Singapore typically do not qualify as tax residents unless specific conditions regarding management control are met.
What is a Certificate of Residence (COR)
The Certificate of Residence (COR) verifies tax residency, allowing individuals and companies to access tax treaty benefits. A Certificate of Residence is issued by the Inland Revenue Authority of Singapore (IRAS) to certify tax residency in Singapore.
Applying for a COR involves submitting a detailed form along with supporting documents to the Inland Revenue Authority of Singapore (IRAS). The typical processing time for the paper form is approximately 14 days. The application process for a COR typically takes 14 days but may take longer for complex cases. The entire process takes about one month after submission to IRAS.
Apply for your Certificate of Residence with ease
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Companies Not Incorporated in Singapore
Foreign companies that are not incorporated or managed in Singapore are generally not eligible for a COR. This rule applies to both foreign entities and their branches, as they all function as separate legal entities.
However, the IRAS may issue a COR if the company can: Show that management is exercised in Singapore, and provide valid reasons for not incorporating locally. To obtain a COR, a company must demonstrate that its control and management are exercised in Singapore.
- Show that management is exercised in Singapore; and
- Provide valid reasons for not incorporating locally.
If these conditions are met, IRAS may ask for additional supporting documents to verify the claim.
Foreign-Owned Investment Holding Companies
Companies with more than 50% foreign ownership and purely passive foreign income are typically not eligible for a COR. Foreign ownership is assessed at the level of the ultimate holding company.
A COR may be granted if the company can demonstrate that it manages its global operations from Singapore and has valid commercial reasons for setting up here.
It should also show clear links to Singapore, such as related tax-resident entities or businesses operating locally, Singapore-based directors who are resident aliens or citizens (excluding nominees and C-suite executives), or support services provided by a related company in Singapore. Meeting these conditions can make a foreign-owned investment holding company eligible for COR consideration.
Permanent Establishment (PE)
A permanent establishment (PE) is a fixed place of business through which a company conducts activities. The establishment can face taxation in the host country.
A PE can arise from activities such as maintaining a sales office or having a factory. Profit allocation to a PE involves considering domestic laws and the nature of business activities.
Key Strategies to Avoid Double Taxation
Singapore offers several mechanisms to mitigate the double taxation burden and ensure tax efficiency for individuals and businesses. These include:
Treaty-based relief
Singapore’s tax treaties help prevent double taxation by allocating taxing rights and offering mechanisms to minimise tax on the same income.
- DTAs allocate taxing rights between Singapore and treaty partners, often reducing or exempting tax at source.
- If both countries tax the same income, Foreign Tax Credits (FTCs) allow taxpayers to offset foreign tax paid against Singapore tax on the same income.
- Where no DTA exists, Unilateral Tax Credits (UTC) may still offer relief.
- Corporate tax exemptions for income arising from a foreign jurisdiction, such as dividend tax and branch profits, may apply if certain conditions are met.
Dispute resolution through MAP
If taxation occurs contrary to DTA provisions, taxpayers can request a Mutual Agreement Procedure (MAP) within the prescribed timeframe to resolve issues between the tax authorities of the two countries.
Tax planning and investment structuring
- Proactive tax planning helps optimise available deductions, credits, and exemptions, lowering taxable income and minimising the risk of double taxation.
- Strategic investment structuring, such as routing investments through holding companies in jurisdictions with favourable tax treaties, can further reduce tax liabilities while maintaining legal separation between entities.
Some DTAs include mandatory arbitration to resolve unresolved disputes after a set period, ensuring a binding decision.
Understand Singapore taxes at a glance
Our free guide breaks down Singapore’s tax rates, employee-related taxes, and the exemptions and reliefs your business may qualify for — clearly and simply
Foreign tax credits
Foreign tax credits mitigate double taxation by allowing companies to offset taxes paid to foreign authorities against their Singapore tax law liabilities. The amount of foreign tax credit that can be claimed is capped at the lower of the Singapore tax owed or the foreign tax paid.
To qualify for foreign tax credits, a company must:
- Be a Singapore tax resident for the relevant Year of Assessment (YA
- Be in a tax payable position in Singapore (i.e. not in a loss-making year)
- Have paid tax on the same foreign income in accordance with an Avoidance of Double Taxation Agreement (DTA), if applicable
The credit can be claimed in Form C of the Income Tax Return and must be supported by documents showing proof of tax payment and income details.
Mutual Agreement Procedure (MAP)
A Mutual Agreement Procedure enables two or more jurisdictions to collaborate in resolving disputes for tax purposes. Tax authorities can agree to adjust taxable income to prevent double taxation through mutual concessions.
If a taxpayer does not accept the MAP outcome, they can challenge the taxation in the relevant jurisdiction’s court system.
Exchange of information
Information exchange agreements enable the exchange of tax-related information between home and foreign jurisdictions, aiming to combat tax evasion between jurisdictions.
The exchange of information can occur through various methods: on request, automatically, or spontaneously. Singapore conducts automatic exchanges under agreements like the Common Reporting Standard and FATCA.
Which Countries Have DTAs with Singapore?
Singapore has signed double taxation agreements with approximately 100 countries worldwide. These agreements aim to prevent double taxation and facilitate international trade and investment.
Category | Countries / Entities | Notes |
|---|---|---|
| Full DTAs with Singapore | Comprehensive treaties with 80+ jurisdictions, including key countries across Asia (India, China, Japan), Europe (France, Germany, UK), Middle East (UAE, Qatar, Saudi Arabia), Africa (South Africa, Nigeria), and the Americas (Canada, Brazil, Mexico). | Cover allocation of taxing rights, withholding tax rates, relief mechanisms, and Mutual Agreement Procedures (MAP). |
| Limited DTAs / EOIs | Select jurisdictions such as Bahrain, Brazil, Chile, Hong Kong, Oman, Saudi Arabia, UAE, and the US. | Primarily focused on exchange of information, not full treaty benefits. |
How Can Osome Help with Handling Double Taxation?
Osome can support businesses pay taxes and navigate Singapore’s Double Taxation Agreements (DTAs) and related tax relief mechanisms through its end-to-end accounting and compliance services. Our team of experienced tax professionals ensures that your company maximises the benefits of DTAs by accurately assessing eligibility, preparing and submitting necessary documentation such as Certificates of Residence (COR), and claiming applicable tax exemptions or foreign tax credits.
By partnering with Osome, businesses can reduce their overall tax burden, avoid costly double taxation, and focus on growth and expansion in international markets with confidence. Explore our comprehensive Singapore accounting services to streamline your financial management and compliance.
Summary
Understanding double taxation and utilising available tools to mitigate it is crucial for individuals engaged in international financial activities. By utilising DTAs, tax credits, and strategic planning, you can explore new tax exemption opportunities and enhance your financial efficiency. Stay informed and proactive to maximise the benefits available to you.
Ruth Dsouza Prabhu is a content developer with a passion for turning ideas into clear, engaging narratives. With a strong background in marketing communications and lifestyle writing, she simplifies complex business topics for entrepreneurs. Her work spans strategy, storytelling, and thought leadership, always focused on clarity, credibility, and impact.
