Singapore's Inland Revenue Authority announced the entry into force of the Double Taxation Agreement (DTA) between Singapore and Laos, signed on February 21, 2014.
The DTA encourages and facilitates cross-border trade and investment between Singapore and Laos by providing greater clarity on taxing rights and minimizing the scope of double taxation between the two countries.
Among other provisions, the DTA provides for lower withholding tax rates on cross-border payments of dividends, interest and royalties.
The withholding tax rates under the DTA are as follows:
- Dividends: paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in either State. Since Singapore's domestic withholding rate for dividends is zero, dividends will be exempt from withholding tax in Singapore.
- Interests: exempted when paid to the government of the other Contracting State; 5% otherwise.
- Royalties: 5%.