Double Tax Agreement Between Singapore and Cambodia: What You Need to Know
Singapore and Cambodia have a Double Taxation Agreement (DTA) that was signed on 20 June 2005. The main objective of this agreement is to avoid the double taxation of income earned by residents of both countries. This agreement also outlines the tax treatment of various types of income such as dividends, royalties, and capital gains.
What is a Double Taxation Agreement?
A Double Taxation Agreement is a treaty signed between two countries to avoid the double taxation of income earned by residents of both countries. Double taxation occurs when the same income is taxed twice in two different countries. This can happen when a person or company has income-generating activities in multiple countries, and both countries try to tax the same income.
The DTA between Singapore and Cambodia ensures that residents of both countries are not subjected to double taxation. The agreement also provides for the exchange of information between the two countries to help prevent tax evasion.
What are the Key Features of the Singapore-Cambodia DTA?
The Singapore-Cambodia DTA covers various types of income such as dividends, interest, royalties, and capital gains. Here are some of the key features of the agreement:
1. Dividends: Dividends paid by a company in Cambodia to a resident of Singapore will be taxed at a maximum rate of 5%. Similarly, dividends paid by a Singaporean company to a Cambodian resident will be taxed at a maximum rate of 10%.
2. Interest: Interest income earned by a resident of one country from the other country will be taxed at a maximum rate of 10%.
3. Royalties: Royalties paid by a company in Cambodia to a resident of Singapore will be taxed at a maximum rate of 10%. Similarly, royalties paid by a Singaporean company to a Cambodian resident will be taxed at a maximum rate of 15%.
4. Capital Gains: Capital gains from the sale of immovable property will be taxed in the country where the property is located. Capital gains from the sale of shares in a company will be taxed in the country where the seller is resident, subject to certain conditions.
Benefits of the Singapore-Cambodia DTA
The DTA between Singapore and Cambodia provides several benefits for businesses and individuals operating in both countries. Some of the key benefits include:
1. Avoidance of double taxation: Residents of both countries can avoid being taxed twice on the same income.
2. Reduced tax rates: The DTA provides for reduced tax rates on various types of income such as dividends, interest, royalties, and capital gains.
3. Certainty and clarity: The DTA provides clarity on the tax treatment of income earned by residents of both countries, reducing uncertainty for businesses and individuals.
Conclusion
The Double Taxation Agreement between Singapore and Cambodia provides an important framework for businesses and individuals operating in both countries. The agreement ensures that residents of both countries are not subjected to double taxation and provides for reduced tax rates on various types of income. Businesses and individuals operating in both countries should be aware of the key features of the DTA to ensure they are compliant with the tax laws of both countries.