Update India-Singapore treaty
The 2005 Protocol to the India-Singapore treaty (the ‘2005 Protocol’) provides for exemption of Indian tax on gains from the alienation of shares in an Indian company by Singapore residents, subject to certain conditions being met. However, this exemption is contingent upon the availability of similar benefit to a tax resident of Mauritius under the India-Mauritius treaty.
The government of India issued a press release on May 10, 2016, announcing that India and Mauritius had signed a protocol amending the India-Mauritius treaty. This protocol will give India the right to tax capital gains on the alienation of shares in an Indian company, subject to certain grandfathering provisions during the transition period from April 1, 2017 to April 1, 2019.
Given the amendment to the India-Mauritius treaty, there is uncertainty over the capital gains tax treatment under the 2005 Protocol.
Other treaty updates
Ecuador – A new tax treaty with Ecuador was ratified and entered into force on December 18, 2015.
Luxembourg – A revised treaty with Luxembourg was ratified and entered into force on December 28, 2015, which replaces the existing agreement. However, the tax sparing relief provisions of the 1993 treaty will continue to apply for five years from the date the new treaty takes effect.
Rwanda – A new treaty with Rwanda entered into force on February 15, 2016.
San Marino – A new treaty with San Marino was ratified and entered into force on December 18, 2015.
Seychelles – A new treaty with Seychelles was ratified and entered into force on December 18, 2015.
Thailand – A revised treaty with Thailand entered into force on February 15, 2016.
United Arab Emirates – The Second Protocol amending Singapore’s standing tax treaty with the United Arab Emirates entered into force on March 16, 2016. The revised terms in the Second Protocol include longer threshold periods to ascertain the presence of a permanent establishment (PE) and lower withholding tax (WHT) rates for dividends and interest income.
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