The Inland Revenue Authority of Singapore has announced that the second protocol amending the existing double taxation agreement (DTA) between Singapore and Vietnam entered into force on January 11, 2013, and is generally effective from January 1, 2014.
The protocol, which was signed on September 12 last year, revises various matters within the original DTA of March 2, 1994. It is hoped that it will enhance trade and investment flows and elevate the level of tax cooperation between Singapore and Vietnam. In particular, it updates the exchange of tax information between the two countries to the internationally agreed standard. Information can apply to “taxes of every kind and description” imposed in the countries, and it is provided that no tax authority can refuse to provide information solely because it does not require the information for its own domestic purposes, or because the information is held by a bank or similar institution. In addition, the amendments introduced by the protocol also include revision to the permanent establishment, dividends, interest and capital gains articles of the original DTA. For example, the protocol states that a permanent establishment arises in the provision of services, including consultancy services, only if such activities continue (for the same or a connected project) within a country for a period or periods aggregating more than 183 days within any twelve months. It also provides for a reduction in the previously-agreed 10 percent withholding tax on interest charged by Vietnam, if any DTA completed by the latter with any other country includes a lower rate; and for a reduction, from 15 percent to 10 percent, in the tax payable on royalties, other than those in respect of payments received for the use of any patent or industrial, commercial or scientific equipment, where the rate will remain at 5 percent.