On or about 23 Dec 2021, the Agreement between the Singapore and Armenia for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance (“DTA”), signed on 8 July 2019, entered into force on 23 December 2021.
The DTA will enhance the cross-border trade and investment between both countries. It lowers the withholding tax rates on income flows arising from cross-border business activities, and stipulates the taxing rights of both jurisdictions to minimise double taxation.
The key terms to Permanent Establishments
- Threshold of nine months for construction-related activities, beyond which residents of a contracting state could trigger a taxable presence in the other contracting state
- Threshold of 183 days in any twelve-month period for the furnishing of services by an enterprise of a contracting state within the other contracting state
The withholding tax rates under the DTA are as follows:
- dividends —
- 0% withholding tax rate (if shareholding ≥ 25% or investment in share capital ≥ US$300,000)
- 5% withholding tax rate (all other cases)
- (since Singapore’s domestic withholding rate for dividends is nil, dividends will be exempted from withholding tax under domestic law in Singapore)
- interest — 5%; exempted from tax if paid to the governments
- royalties — 5%.