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Double Taxation Avoidance Agreement With Philippines

Dividends paid by a Singapore company to the Philippine beneficiary are not subject to a tax in Singapore in the event of an extension, as Singapore currently does not apply any withholding tax on dividends. If the beneficiary is the Philippine holding company, there is a 100% exemption from corporate tax on foreign dividends if the holding company does not operate in the Philippines, otherwise a reduced corporate tax rate of 10% will be applied. If the beneficiary is a person residing in the Philippines, dividend income is taxed at individual Philippine income tax rates. For example, in Singapore, a company may demand two tax breaks up to the border between the lower tax in the Philippines and the Singapore tax payable. For example, if the Singapore tax payable is S30,000 and the Philippine tax is $40,000, the maximum maximum tax relief that can be invoked is $30,000. If the Philippine tax were 20,000 S.A., the maximum double of the tax relief would be 20,000 S; In this case, the Singapore-based tax payer is liable for the balance of $10,000 in Singapore tax. Below are some of the important bilateral agreements that currently exist between Singapore and the Philippines. Countries with which the Philippines currently has double taxation agreements (DBA): the interest paid by the Philippine company to non-residents is generally subject to a 30% withholding tax. In the case of a Singapore beneficiary, the rate is reduced to 15 or 25 per cent if the above DTA conditions are met. These interest payments will no longer be taxed in Singapore if the foreign tax credit system is applied. Taxes covered by the agreement include corporate and income tax in both countries (Philippine and Singapore tax). Singapore and the Philippines are close geographical neighbours; they have enjoyed strong bilateral economic relations since the formal re-establishment of diplomatic relations between the countries in 1969.

An important step in the creation of comprehensive economic cooperation was reached in 1998, when the two countries signed the Memorandum of Understanding on the Philippines-Singapore Action Plan. The implementation of the action plan has made Singapore the fifth largest export market for the Philippines in the world and ASEAN`s largest. Lion City is the seventh largest import supplier to the Philippines. It is also the Philippines` largest international investor, with investment commitments totalling $3.48 billion, or 45.2% of total foreign commitments in 2019. These figures show that bilateral economic relations between countries are deep and lasting. In the first half of 2019, CSCCI signed an agreement with the Makati Business Club during the visit of the House delegation. The agreement aims to promote closer trade relations between Singapore and Philippine companies. Singapore and the Philippines signed a DA in 1977.

The agreement includes provisions to avoid double taxation of the same source of income. In the absence of DBA, income is doubly taxed, i.e. two countries impose their own taxes on the same income. To address this problem and reduce the overall burden on a taxpayer, Singapore and the Philippines have entered into a DBA to ensure that all income normally taxable in both countries is taxed only in one of them. The provisions of this DBA will be further reviewed below. This deep economic integration between the two countries is the result of bilateral agreements aimed at improving and improving trade transactions between the two markets.