Administrative costs or other similar payments which the head office of a Contracting State receives in its capacity as manager of an enterprise established in the other Contracting State shall be taxed in that other Contracting State. In other words, directors` fees are taxable in the country where the company paying the fees is established. China`s general anti-avoidance rules were first introduced under the 2008 Corporate Tax Law (CIT), which provides that if a company`s taxable income due to the implementation of “agreements that do not have a reasonable business purpose,” the tax administration has the right to make adjustments. As has already been said, the main purpose of a double taxation convention, such as the one between Singapore and China, is to avoid the taxation of similar income in two different states. The most common incomes generated by companies and individuals are profits from activity, real estate, employment and other income such as interest, dividends and even intellectual property rights. The double taxation treaty between Singapore and China was an important step in the development of bilateral relations between Singapore and China. The original DBA was signed in 1986. The current version of this agreement was concluded in 2007. It aims to alleviate the double taxation of income received in one jurisdiction by a resident of the other jurisdiction. The main provisions of the current DBA are discussed in detail in the section below. Under the Singapore-China Double Taxation Convention, a permanent establishment is a permanent establishment: from an investor`s perspective, international taxation can cause confusion when investors are subject to two different and potentially contradictory tax systems.
For example, Hong Kong and Singapore adopt a “territorial source principle” of taxation, which means that only profits received locally are taxable. One of the first chapters of the double taxation convention between Singapore and China deals with the status of permanent establishments of enterprises registered in one of the States Parties and operating in the other. Even though all of Singapore`s double taxation treaties contain such provisions, it is important to keep in mind that each agreement is different and contains specific rules regarding the status of foreign companies operating in Singapore. Since the 2008 Corporate Tax Law, which laid the foundation for the fight against tax evasion in China, the state tax administration has issued a flood of circulars imposing reporting requirements for offshore transactions, describing the qualification as a beneficial owner and dictating the protocol for using contractual benefits. . . .