On 11 June 2015, officials from Singapore and Thailand signed a new income tax treaty. Once in force and effective, the treaty will replace the 1975 income tax treaty between the two countries, which is currently in force.

Taxes Covered

The treaty covers Singapore income tax, and Thai income tax and petroleum income tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise from one Contracting State furnishes services in the other State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days in any 12-month period.

Withholding Tax Rates

• Dividends - 10%
• Interest -
  • 10% if the beneficial owner is a financial institution or insurance company;
  • 10% for interest paid in relation to the sale on credit of any equipment, merchandise or services, provided the sale was at arm's length;
  • Otherwise 15%
• Royalties -
  • 5% if for the use or the right to use any copyright of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting;
  • 8% if for the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment;
  • Otherwise 10%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

• Gains from the alienation of immovable property situated in the other State;
• Gains from the alienation of shares deriving at least 75% of their value directly or indirectly from immovable property situated in the other State, unless listed on a recognized stock exchange; and
• Gains from alienation of movable property forming part of the business property of a permanent establishment in the other State

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries generally apply the credit method for the elimination of double taxation. However, in the case of dividends paid by a Singapore resident company to a Thailand resident company that holds at least 25% of the paying company's voting shares, Thailand will apply the exemption with progression method.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged. It will apply in Thailand from 1 January of the year following its entry into force. It will apply in Singapore in respect of withholding taxes from 1 January of the year following its entry into force and for other taxes from 1 January of the second year following its entry into force.

The provisions of the 1975 income tax treaty between Singapore and Thailand will cease to have effect for the relevant taxes on the dates the new treaty applies.