The National Taxation Bureau of the Central Area, Ministry of Finance (hereinafter referred to as the NTBCA) states that the renewed “Agreement between the Taipei Representative Office in Singapore and the Singapore Trade Office in Taipei for the Elimination of Double Taxation with Respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance” (hereinafter referred to as “the Renewed Agreement”), signed on December 31, 2025, entered into force on February 13, 2026, after both sides completed their respective domestic law requirements and notified each other. It will become effective on January 1, 2027. With respect to taxes withheld at source, the Renewed Agreement shall apply to income payable on or after January 1, 2027; with respect to other taxes, it shall apply to income for taxable periods beginning on or after January 1, 2027. The Income Tax Agreement between Taiwan and Singapore signed on December 30, 1981 (hereinafter referred to as “the Original Agreement”) shall cease to have effect, from the date of application of the Renewed Agreement, with respect to all matters covered by the Renewed Agreement.

NTBCA explains that the Renewed Agreement primarily reflects developments in bilateral economic and trade relations and was undertaken with reference to the Model Tax Convention of the Organisation for Economic Co-operation and Development (OECD) and the United Nations (UN), with a purpose to provide more appropriate tax relief measures so as to provide a favorable tax environment conducive to the bilateral trade and investment. The key updates are as follows:

1. Reduction of maximum tax rates on passive income:

The Renewed Agreement reduces the withholding tax rate for dividends and royalties to 10%, replacing the original rates up to 40% for dividends and 15% for royalties. Certain types of interest are also exempted, reducing the tax burden on bilateral cross-border trade.

2. Revised the threshold for determining permanent establishment (PE):

The threshold for determining construction PE has been revised from “more than six months in a calendar year or more than six consecutive months overlapping two calendar years” under the Original Agreement to “projects and activities last more than 9 months.” Additionally, services PE threshold has been determined, services are performed exceeding an aggregate of 183 days within any 12-month period. If the enterprise carries on business through a PE, the profits attributable to the PE may be taxed.

3. Three-year transition period for tax credit incentives:

The Original Agreement provided indirect tax credits and a tax exemption clause as preferential mechanisms to foster bilateral economic development. Given that neither Taiwan nor Singapore is a developing country, the credit mechanisms should be aligned with those provided under Taiwan's other effective income tax agreements, and take into account the need for enterprises to have a reasonable adjusting period for dealing with the change. Therefore, Subparagraph 2 of Paragraph 2 and Paragraph 3 of Article 23 of the Renewed Agreement stipulate that these preferential mechanisms are subject to transition provisions which are applicable only after three taxable years from the date of application of the Renewed Agreement. Accordingly, the preferential mechanisms will apply in Taiwan only to profit-seeking enterprises' income tax filings for the tax years 2027, 2028, and 2029.

NTBCA would like to remind enterprises to pay attention to the revised provisions and applicable periods under the Renewed Agreement and make timely adjustments accordingly. If you have any questions, please call the toll-free service number 0800-000321 for consultation, and we will do our best to serve you.

Contact person: Profit-Seeking Enterprise Income Tax Division, Ms. Huang
Tel: (04)2305-1111 ext. 7128.