TAX TREATY NEGOTIATIONS

Dr Kanwaljit Soin asked the Minister for Finance if he will elaborate on the problems that cause the delay of tax treaty negotiations with other countries as Singapore has concluded comprehensive tax treaty with only about 27 countries.

Cdre Teo Chee Hean: A tax treaty helps to promote bilateral economic relations between two countries. It provides clarity on the taxing rights of each country on all forms of income flow between the two countries. It also removes instances of double taxation which can arise from trade and cross-border investment activities between the two countries. Generally, we are keen to conclude tax treaties with countries with which we have significant investment and trade flows. Before we commence on any treaty negotiations, we would evaluate the feasibility of having such a treaty in respect of the mutual benefits which it would bring about. Being a bilateral agreement, the pace at which a tax treaty can be concluded and ratified is also dependent on how quickly the other country wants to have the treaty and the terms it is prepared to accept.

Based on these factors, we have concluded 31 comprehensive tax treaties with almost all our major trading partners. Of the 31, only 2 have yet to be ratified.

There has been no delay in treaty negotiations. In this regard, 1993 has been a bountiful year. Tax treaties were signed in that year with Luxembourg, Pakistan and Poland. Treaty negotiations were also held in 1993 with Hungary, Vietnam, United Arab Emirates, Turkey and Mexico. The treaty with Vietnam was signed in 1994. There were also several renegotiations with our existing treaty partners, namely, Malaysia, Netherlands, New Zealand, Japan, Denmark and India.