Substantial changes in loan interest tax levied under the Russian-Singapore Avoidance of Double Taxation Agreement

Amendments to the Singapore-Russian DTA came into effect as of January 1st, 2017. Changes specifically concerned companies’ interest rate on taxable loans.

Currently, if a Singapore overseas company is provided a loan by a Russian enterprise, the profit gained by the Russian party in the form of interest is no longer subject for taxation in Singapore, as it was stipulated by the previous wording of the Agreement.

A Singapore offshore company has no necessity to levy withholding taxes and forward it to the state budget as per Article 45 of the Singapore Tax Code. The Russian company should record the Singapore-gained profit in the tax statement submitted in Russia. The Avoidance of Double Taxation Agreement enables a reduced income tax rate.