The income tax treaty between Ethiopia and Singapore entered into force on 8 December 2017. The treaty, signed 24 August 2016, is the first of its kind between the two countries.
The treaty covers Ethiopian tax on income and profit, and the tax on income from mining, petroleum and agricultural activities. It covers Singapore income tax.
Note - The final protocol to the treaty clarifies that the term "royalties" does not include payments of any kind received as a consideration for the use of, or the right to use computer software or any digital content on any media for reproduction or transmission where the payments do not constitute payments for the rights to commercially exploit such computer software or digital content by reproducing, modifying, adapting the computer software or digital content for the purpose of distribution or sale, or by preparing derivative works based on the computer software or digital content for the purpose of distribution or sale.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation. For dividends paid by a resident of Ethiopia to a resident of Singapore that directly or indirectly owns at least 10% of the share capital of the Ethiopian payer, Singapore will provide a credit for the Ethiopian tax paid on the profits out of which the dividends are paid.
A provision is also included for a tax sparing credit for tax that would otherwise be payable but has been reduced or exempted for a limited period of time in a Contracting State in accordance with the laws and regulations of that State aimed at promoting economic development.
The treaty applies in Ethiopia from 8 July 2018 and applies in Singapore from 1 January 2018 with regard to withholding taxes and from 1 January 2019 with regard to other taxes.
We’re here to answer any questions you have about the Orbitax products and services.
We’re committed to providing high value, low cost tax research and management solutions.
Our Twitter account is where you can find latest information, news updates, offers and lots more.