DTA Protocol

Singapore Vietnam DTA Protocol Comes Into Force: Just a few days ago, Singapore and Vietnam have entered into force a second protocol to their existing double taxation agreement (DTA), which will be effective on 1 January 2014.This was signed by the Vietnamese Minister of Finance Voung Dinh Hue and Singaporean Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam last 11 January 2013.

Article 5: Permanent Establishment


The government of both countries realized they left certain tax items unrevised, including issues concerning dividends, capital gains, permanent establishments, and interests, which is particularly stated in the following Articles:

Establishment would only be considered permanent if and only if the establishment performs activities for an aggregated 183 days for a year in either Vietnam or Singapore.

This will be extended to a factory, branch, place of management, workshop, office, or well and quarry licensed to extract natural resources. However, it will not extend to establishments solely used for storage, display, or delivery.

Article 11: Interest

A paragraph was inserted to clarify what constitutes as a taxation of interest. Furthermore, the previously agreed upon 10% withholding tax on interest to be charged by Vietnam would be lowered, if and only if another country with existing DTA with the country has specified a lower rate for it.

Article 12: Royalties


Tax payable royalties would be reduced to 5%, but only in reference to equipment to be used, patented, and planned solely for industrial, scientific, or commercial experience; otherwise, the rate will be no more than 10% for the other types of royalties.

Article 13: Capital Gains


The article clarifies that shares of a company will be taxed in the other State if and only if it is not yet a listed company and if 50% of its share value has been derived from an immovable property within the territorial and political boundaries of that State.

Article 27


The originally created Exchange of Information Article has been updated for it to meet with the internationally agreed Standard, particularly in reference to the information of the taxpayer, its restrictions, and its impositions.

The last amendment to the DTA protocol was signed last 12 September 2012. That was the first amendment to the existing DTA between these two countries, which was signed on 2 March 1994. The recent changes were agreed upon in hope that it will enhance investment and trade flow, aside from elevating the level of tax cooperation between Vietnam and Singapore.