Singapore-Indian sign protocol to update bilateral avoidance of double taxation agreement

Singapore and India have signed a Protocol to amend their bilateral Avoidance of Double Taxation Agreement (DTA) in New Delhi. The Protocol was signed between H.E. Lim Thuan Kuan, Singapore's High Commissioner to India and Shri Sushil Chandra, Chairman of the Central Board of Direct Taxes, India.

DPM Tharman and Arun Jaitley also agreed on steps towards a set of new initiatives for joint promotion of bilateral investments. Photo courtesy:

The protocol was signed during Singapore Deputy Prime Minister Tharman Shanmugaratnam's recent India visit. Following a meeting between Prime Minister Lee Hsien Loong and Prime Minister Narendra Modi in October 2016, Tharman Shanmugaratnam, Deputy Prime Minister and Coordinating Minister for Economic and Social Policies of Singapore and Arun Jaitley, Minister of Finance and Corporate Affairs of India met to finalise the terms of the revised DTA as well as discuss steps to sustain and deepen bilateral economic ties between Singapore and India, including facilitating investment flows. Singapore was the largest foreign direct investor into India for the period April 2015 – March 2016 and one of the largest portfolio investors in India markets.

DPM Tharman and Minister Jaitley also agreed on steps towards a set of new initiatives for joint promotion of bilateral investments with a view to concluding an agreement in the second half of 2017.

On the lines of India-Mauritius DTA
With the revision to the India-Mauritius DTA to phase out capital gains tax exemption, the capital gains tax exemption for shares in the Singapore-India DTA, which had been pegged to the India-Mauritius DTA, has had to be similarly amended. Singapore and India have reached an agreement to phase out the capital gains tax exemption gradually, and have also committed to find new ways to promote bilateral investments.

The new Protocol will continue to be underpinned by the stringent substance requirements which are unique to the Singapore-India DTA, and which ensure that the Protocol can only be enjoyed by tax residents with substantive economic activities. Check the table for details.