US Singapore Tax Treaty: IRS Summary of US Singapore Tax Treaty
As of 2019, the United States and Singapore have not entered into a bilateral tax treaty. This is despite the fact that Singapore is a hub for international business, and many U.S. persons have investments in Singapore. Even though the U.S. and Singapore have not entered into a tax treaty, Singapore has entered into double taxation treaty agreement with many countries. We will summarize how the IRS treaty income from Singapore.
We have a separate article summarizing U.S. tax treatment of a CPF.
Singapore Tax Treaties
If you are a Singaporean resident or citizen with investments in other countries, you should check the with Singapore to determine your potential tax liabilities, exceptions and exclusion.
The IRAS (Inland Revenue Authority in Singapore) provides the following summary:
Purpose of DTAs
A DTA spells out the taxing rights between Singapore and her treaty partner on the different types of income arising from cross-border economic activities between the two jurisdictions.
The DTA also provides for reduction or exemption of tax on certain types of income.
Only Singapore tax residents and tax residents of the treaty partner can enjoy the benefits of a DTA. To find out who are our treaty partners, please refer to the List of Avoidance of Double Taxation Agreements.
Singapore Tax Residents
When your company earns foreign income from a treaty partner, you may wish to claim the benefits under the DTA that entitles a company not to pay tax or to pay tax at a reduced rate in the foreign jurisdiction.
Certificate of Residence (COR)
To enjoy this benefit, you would need to submit a COR to the foreign jurisdiction to prove that the company is a Singapore tax resident. To find out more about the application process, please refer to Applying for COR/ Tax Reclaim Form.
Double Tax Relief (DTR)
When you receive foreign income in Singapore, you may be taxed on the income. In the case where the benefit under the DTA is not an exemption of tax, but a reduction of tax rate, the Singapore company will also suffer tax in the foreign jurisdiction.
In this way, the same income is subjected to taxation twice. The DTA provides relief for this double taxation by allowing the Singapore company to claim a credit of the foreign tax suffered against its Singapore tax payable on the same income.
This credit is known as a DTR. To find out more about this relief, please refer to Foreign Tax Credit.
Tax Resident of our Treaty Partners
Tax residents of our treaty partners can also enjoy the benefits of the DTAs when they derive income from Singapore.
To claim this benefit, they have to prove that they are a tax resident of the treaty partner by submitting to IRAS, a completed Certificate of Residence from Non-Residents (Claim for relief from Singapore Income Tax Under Avoidance of Double Taxation Agreement) that is duly certified by the tax authority of their country of residence.
For the specimen format of a Certificate of Residence from Non-Resident claim for relief, please refer to Claiming Of Tax Relief/Exemption under the Avoidance of Double Taxation Agreement (DTA).
Singapore and U.S. Tax
Even though the U.S. and Singapore do not have a bilateral tax treaty in place, if a U.S person (Citizen, Legal Permanent Resident or Foreign who meets the Substantial Presence Test) with Singapore assets and/or income may have to report to the IRS.
The U.S. follows a worldwide income tax model. That means that U.S. persons are taxed on their worldwide income. Even if the income is earned or sourced from Singapore, it is taxable in the U.S. – unless a limitation, exception or exclusion applies.
A person may qualify for the Foreign Earned Income Exclusion or Foreign Tax Credit.
Singapore Account and Asset Reporting
For U.S. persons with Singapore assets, investments, accounts and/or income, they may also have a reporting requirement.
Some common Examples of Singapore reporting include:
- Singapore Bank Accounts
- Singapore Investment Accounts
- Singapore Stock and Securities
- Singapore Pension and Retirement Accounts
- Singapore Assets
- Singapore Life Insurance
Some common Examples of common reporting forms, include:
- FBAR (FinCEN Form 114): Foreign Bank & Financial Accounts
- FATCA (Form 8938): Specified Foreign Financial Assets
- Form 3520: Foreign Gift, Trust or Inheritance
- Form 3520-A: Foreign Trust
- Form 5471: Foreign Corporation
- Form 5472: Foreign Owner of U.S. Corporation
- Form 8621: Passive Foreign Investment Companies
- Form 8865: Foreign Partnership
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