S'pore-Qatar tax agreement kicks in tomorrow

AN agreement between Singapore and Qatar on avoidance of double taxation and prevention of fiscal evasion comes into force tomorrow.

Under the pact, the withholding tax rate on dividends will be zero per cent.

In addition, for dividends received by a Singapore resident company from a Qatar resident company, Singapore will allow a tax credit for the Qatar tax paid on the portion of profit out of which the dividends are paid.

A Singapore company will be eligible for the tax credit if it owns at least 10 per cent of the share capital of the Qatari company paying the dividends, according to a statement from the ministry of finance.

The respective withholding tax rates on interest and royalties will be 5 per cent and 10 per cent. The terms will apply to income derived from January next year and will be effective for an initial 10 years.

The agreement between Singapore and Qatar was signed when Prime Minister Lee Hsien Loong visited the Middle East in November last year as part of Singapore's efforts to strengthen relationships with Middle Eastern countries.

Singapore has concluded similar agreements with Bahrain, Egypt, Israel, Kuwait and Oman. With the latest agreement, Singapore will have 56 comprehensive tax treaties in place. 'The treaties reflect Singapore's continual efforts to engage her trading partners in relieving double taxation, which encourages and facilitates the cross-flow of trade, investment, financial activities and technical know-how,' the ministry of finance said.