Suppose your Singapore company has a loan from a UK lender and receives an invoice for £100,000 in interest fees. You pay 15% withholding tax of £15,000 to IRAS. However, Singapore’s DTA with the United Kingdom cuts that rate to 5%. You just saved £10,000 on one transaction.
Most businesses, in our observations, miss these savings. They do not know which agreements apply or how to properly claim benefits. Singapore has 108 tax agreements: 98 full DTAs, 8 Limited DTAs for shipping and aviation, and 2 information exchange arrangements. Each type serves different purposes.
Crucially, IRAS changed the rules for 2025. Foreign-owned holding companies now need real substance in Singapore – actual executives based here, not just administrative support. These changes respond to international pressure on “treaty shopping.”
In this article, you will learn which rates apply to your payments, what documentation IRAS requires, and whether your company structure still qualifies under the new substance rules.
Key Takeaways
- Singapore has 108 tax agreements, including 98 full DTAs, 8 Limited DTAs, and 2 EOI arrangements. These agreements reduce withholding tax rates and prevent double taxation, making Singapore an attractive hub for businesses.
- Singapore has 108 tax agreements, including 98 full DTAs, 8 Limited DTAs, and 2 EOI arrangements. These agreements reduce withholding tax rates and prevent double taxation, making Singapore an attractive hub for businesses.
- Non-compliance with treaty requirements, such as missing CORs or incorrect withholding rates, can lead to penalties and financial exposure. Businesses must ensure proper documentation and adherence to IRAS rules.
- InCorp helps businesses navigate Singapore’s tax treaty system, ensuring compliance with the 2025 COR changes and capturing all available tax benefits while mitigating risks.
Understanding Singapore’s 3-Tier Tax Agreement Framework
Why Do Tax Treaties Matter?
Double taxation strikes the same income twice. For example, if your company earns profit in Malaysia, Malaysia taxes it. That profit returns to Singapore, and Singapore taxes it again. A DTA reduces or removes one tax bill. Singapore built this network to support its role as Asia’s premier business hub, signing agreements with over 100 jurisdictions.
The 3 Agreement Types
IRAS sorts all 108 international agreements into 3 categories:
- DTAs (98 agreements): Full treaties with major economic partners. These cover all income types where substantial trade exists.
- Limited DTAs (8 agreements): Narrow agreements, usually covering only shipping and air transport income. Singapore protects specific industries without negotiating full treaties.
- EOI Arrangements (2 agreements): Standalone transparency agreements, not tax relief. IRAS uses these where preventing tax evasion matters more than reducing double taxation. In this case, specifically, Bermuda and the United States of America.
In essence, this framework lets Singapore build deep ties through full DTAs, meet transparency standards through EOI arrangements, and address sector needs through Limited DTAs.
Singapore’s Domestic Tax Baseline
What is the 0% Dividend Advantage?
Singapore does not impose withholding tax on dividends. Companies pay corporate tax once on profits. There is also no second tax on distribution to foreign shareholders.
This creates a simple and attractive one-level tax system. If your company earns S$1 million and pays 17% corporate tax, it is able to distribute the rest. Foreign shareholders receive their dividends tax-free from Singapore. This policy makes Singapore incredibly attractive for regional holding companies.
Standard Rates for Interest and Royalties
Interest payments to non-residents face 15% withholding tax. This applies to loan interest, commissions, and fees.
Royalty rates split into two categories:
- 10% for commercial and industrial IP: Technology licences, patents, scientific knowledge. Singapore encourages foreign companies to license technology here.
- 24% for creative works: Payments to authors, composers, and choreographers. This matches the rate for other non-resident individuals.
REIT distributions to non-resident non-individuals carry 10% withholding tax. These domestic rates are, of course, your starting point and DTAs reduce them.
Financial Impact – Comparing Domestic vs. Treaty Rates
Treaties deliver real savings. Here is how Singapore’s domestic rates compare to treaty rates for key partners:
| Jurisdiction | Domestic WHT (Dividends) | Treaty WHT (Dividends) | Domestic WHT (Interest) | Treaty WHT (Interest) | Domestic WHT (Royalties) | Treaty WHT (Royalties) |
|---|---|---|---|---|---|---|
| (Default Non-Treaty) | 0% | N/A | 15% | N/A | 10% | N/A |
| Australia | 0% | 0% | 15% | 10% | 10% | 10% |
| China | – | – | 15% | 7% / 10% | 10% | 6% / 10% |
| Malaysia | 0% | 0% | 15% | 10% | 10% | 8% |
| United Kingdom | 0% | 0% | 15% | 5% | 10% | 8% |
Claiming Treaty Benefits – The Procedural Reality
The Singapore Payer’s Burden
Non-residents do not file claims directly with IRAS. The Singapore-based payer claims Double Taxation Relief on behalf of the foreign recipient. This shifts the compliance burden (and risk) to your company. When e-filing the withholding tax return, you tick the “Double Taxation Relief” box and enter the reduced treaty rate.
3 Steps for Standard Payments for Non-Resident Companies
- Step 1: Check eligibility using IRAS tools like the S45 Double Taxation Relief Tax Rate Calculator.
- Step 2: Obtain a Certificate of Residence (COR) from a non-resident. Get a fresh one each year you claim relief.
- Step 3: Submit to IRAS by 31 March following the claim year. Late submission? IRAS withdraws relief and imposes penalties.
Simplified Route for Professionals
Non-resident professionals use Form IR586. You retain this form – you do not need to submit it unless IRAS requests verification.
The 2025 COR Rule Change – Substance Requirements Tighten
Why These Changes Matter
The OECD’s Base Erosion and Profit Shifting (BEPS) project targets “treaty shopping” – where companies establish shell structures in low-tax jurisdictions purely to access treaty benefits. A holding company with no employees, no office space, and directors who never visit Singapore claims treaty benefits meant for genuine businesses.
This drains tax revenue from countries where real economic activity happens. To continue its ambition to be the world standard for corporate responsibility, Singapore responded. The 2025 COR rule changes demand for real economic substance.
Who Needs a Singapore COR
Singapore companies claiming treaty benefits abroad must prove tax residency to foreign authorities. IRAS issues a Certificate of Residence (COR) for this purpose. Tax residency depends on where “control and management” happens – typically where strategic decisions get made. IRAS generally will not issue CORs to nominee companies or Singapore branches of foreign companies. Control sits elsewhere.
The Foreign-Owned Holding Company Problem
A company is “foreign-owned” if 50% or more belongs to foreign companies or non-citizens. IRAS presumes these companies just follow foreign shareholder instructions. In short, if there is no genuine Singapore control, no COR will be issued.
The New 2025 Standard
IRAS has tightened requirements for all 2025 COR applications. Previously, having related companies in Singapore or receiving administrative support may have worked, but this is no longer the case. Now you must prove strategic decisions happen in Singapore and meet one condition:
- Executive director based in Singapore (not a nominee), or
- Key employee (CEO, CFO, COO) based in Singapore, or
- Active management by a Singapore-based related company
Passive holding structures without real presence will fail. No COR means no treaty benefits abroad, which exposes foreign income to high withholding taxes.
Where to Next With InCorp
Singapore’s tax treaty network offers genuine savings – but only if you apply it correctly. The 2025 COR changes caught many businesses unprepared, where structures that worked for years suddenly don’t qualify.
Claiming treaty benefits creates real compliance risks for Singapore payers. One missing Certificate of Residence? IRAS withdraws relief and imposes penalties. Wrong withholding rate? You are liable for the difference. These are, unfortunately, genuine financial exposures that compound across multiple payments.
At InCorp, we have guided many companies through Singapore’s tax rules. Contact us today to review your treaty position and capture every available benefit whilst staying compliant.
FAQs about Tax Treaty Guide 2025
What is a Double Taxation Agreement (DTA) in Singapore?
- A DTA is a treaty between Singapore and another country that reduces or eliminates tax on the same income in both jurisdictions. Singapore has 98 full DTAs covering all income types. These agreements lower withholding tax rates on payments like interest and royalties, creating immediate cost savings for cross-border transactions.
What changed with Singapore's Certificate of Residence requirements in 2025?
- IRAS tightened COR requirements for foreign-owned holding companies. Previously, having related companies or administrative support in Singapore qualified. From 2025, you must prove strategic decisions happen in Singapore PLUS have an executive director, key employee (CEO/CFO/COO), or active management by a Singapore-based related company physically present.
How do I know if my company qualifies for a Singapore Certificate of Residence?
- Tax residency depends on where "control and management" happens – where strategic decisions get made. Nominee companies and Singapore branches of foreign companies don't qualify. Foreign-owned companies (50%+ foreign ownership) face the strictest test under 2025 rules, requiring genuine substance with executives or key employees physically based in Singapore.
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