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Income Tax (Singapore — Sweden) (Avoidance of Double Taxation Agreement) (Supplementary) Order 1984

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Income Tax Act
(Chapter 134, Section 49)
Income Tax (Singapore — Sweden)
(Avoidance of Double Taxation Convention)
(Supplementary) Order 1984
O 27C
G.N. No. S 19/1984
REVISED EDITION 1990
(25th March 1992)
[1st February 1984]
WHEREAS it is provided by section 49 of the Income Tax Act that if the Minister by order declares that arrangements specified in the order have been made with the Government of any country outside Singapore with a view to affording relief from double taxation in relation to tax under the Act and any tax of a similar character imposed by the laws of that country, and that it is expedient that those arrangements should have effect, the arrangements shall have effect in relation to tax under the Act notwithstanding anything in any written law:
AND WHEREAS by a Convention dated the 17th day of June 1968, between the Government of the Republic of Singapore and the Government of the Kingdom of Sweden, arrangements were made amongst other things for the avoidance of Double Taxation:
AND WHEREAS by a Protocol dated the 28th day of September 1983, between the Government of the Republic of Singapore and the Government of the Kingdom of Sweden, the arrangements set out in the said Convention were modified as prescribed in the said Protocol:
NOW, THEREFORE, it is hereby declared by the Minister for Finance —
(a)
that the arrangements as modified by the said Protocol specified in the Schedule to this Order have been made with the Government of the Kingdom of Sweden; and
(b)
that it is expedient that those arrangements should have effect notwithstanding anything in any written law.
THE SCHEDULE
Protocol Amending the Convention Between
the Government of the Republic of Singapore and
the Government of the Kingdom of Sweden for
the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion With Respect
to Taxes on Income and Capital Signed
in Singapore on 17TH June 1968
    The Government of the Republic of Singapore and the Government of the Kingdom of Sweden;
    Desiring to conclude a Protocol to amend the Convention between the Government of the Republic of Singapore and the Government of the Kingdom of Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital, signed at Singapore on 17th June 1968 (hereinafter referred to as “the Convention”);
    Have agreed as follows:
Article 1
    The following new sub-paragraph (n) shall be inserted immediately after sub-paragraph (m) of paragraph 1 of Article II of the Convention:
“(n)  the term “international traffic” means carriage of passengers, mails, livestock or goods by a ship or aircraft which is operated by an enterprise of one of the Contracting States, except when the ship or aircraft is operated solely between places in the other Contracting State or solely between such places and one or more structures used for the exploration or exploitation of natural resources.”
Article 2
    Article V of the Convention shall be deleted and replaced by the following:
“Article V
1.  Notwithstanding the provisions of Article III, profits of an enterprise of one of the Contracting States from the operation of ships in international traffic may be taxed in the other Contracting State only if such profits are derived from that other Contracting State.
Provided that —
(a)
when a Singapore enterprise derives profits from Sweden by operating ships in international traffic the tax charged in Sweden in respect of such profits shall be reduced by an amount equal to 50 per cent thereof and the reduced amount of the Swedish tax payable on the profits shall be allowed as a credit against the Singapore tax charged in respect of these profits in accordance with the provisions of paragraph 2 of Article XIX;
(b)
when a Swedish enterprise derives profits from Singapore by operating ships in international traffic the tax charged in Singapore in respect of such profits shall be reduced by an amount equal to 50 per cent thereof and the reduced amount of the Singapore tax payable on the profits shall be allowed as a credit against the Swedish tax charged in respect of these profits in accordance with the provisions of paragraph 3 of Article XIX.
2.  The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
3.  For the purposes of this Article profits derived from the other Contracting State shall mean profits from the carriage of passengers, mails, livestock or goods shipped in that State:
Provided that there shall be excluded the profits accruing from passengers, mails, livestock or goods which are brought to that other State solely for transhipment, or for the transfer from an aircraft to a ship.
”
Article 3
    The following new Article, VA, shall be inserted after Article V of the Convention:
“Article VA
1.  Notwithstanding the provisions of Article III, profits of an enterprise of one of the Contracting States from the operation of aircraft in international traffic shall be taxable only in that State.
2.  With respect to profits derived by the Swedish, Danish and Norwegian air transport consortium Scandinavian Airlines System (SAS), the provisions of paragraph 1 shall apply, but only to such part of the profits as corresponds to the shareholding in that consortium held by AB Aerotransport (ABA), the Swedish partner of Scandinavian Airlines System (SAS).
3.  The provisions of paragraph 1 shall likewise apply to profits derived from the participation in a pool, a joint business or an international operating agency.
”
Article 4
    The present provisions of Article VI of the Convention shall form paragraph 1 of the said Article and the following new paragraph 2 shall be added:
“2.  Where a Contracting State includes in the profits of an enterprise of that State — and taxes accordingly — profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.”
Article 5
    Paragraphs 1 to 5 of Article VII of the Convention shall be deleted and replaced by the following six paragraphs and the present paragraph 6 shall become paragraph 7:
“1.  The rate of tax charged by Sweden in respect of dividends paid by a company which is a resident of Sweden to a resident of Singapore shall, if the recipient is the beneficial owner of the dividends, not exceed 15 per cent of the gross amount of such dividends.
Where the resident of Singapore is a parent company the rate of tax charged on such dividends shall, if the recipient is the beneficial owner of the dividends, not exceed 10 per cent of the gross amount of such dividends.
2.  Dividends paid by a company which is a resident of Singapore to a resident of Sweden shall, if the recipient is the beneficial owner of the dividends, be exempt from any tax in Singapore which is chargeable on dividends in addition to the tax chargeable in respect of the profits or income of any company —
(a)
provided that nothing in this paragraph shall affect the provisions of Singapore law under which the tax in respect of a dividend paid by a company which is a resident of Singapore from which Singapore tax has been, or has been deemed to be, deducted may be adjusted by reference to the rate of tax appropriate to the Singapore year of assessment immediately following that in which the dividend was paid;
(b)
provided further that if Singapore, subsequent to the signing of this Convention, imposes a tax on dividends paid by a company resident in Singapore out of its profits or income, such tax may be charged but the rate of tax so charged shall, if the recipient is the beneficial owner of the dividends, not exceed 15 per cent of the gross amount of such dividends, and where the dividend is paid to a parent company which is a resident of Sweden the rate of tax so charged shall, if the recipient is the beneficial owner of the dividends, not exceed 10 per cent of the gross amount of such dividends.
3.  For the purposes of this Article the term “parent company” means a company resident in one of the Contracting States owning directly or indirectly not less than 25 per cent of the share capital of the company resident in the other Contracting State paying the dividends.
4.  The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of one of the Contracting States, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the holding by virtue of which the dividends are paid is effectively connected. In such a case Article III shall apply.
5.  The Government of the Republic of Singapore, including the Monetary Authority of Singapore, the Board of Commissioners of Currency and the Government of Singapore Investment Corporation Pte. Ltd., shall be exempt from Swedish tax with respect to dividends on shares in Swedish joint stock companies; provided that the scope of this exemption has been agreed by the competent authorities of the Contracting States.
However, such exemption shall in no case be given with respect to shares held for other than public purposes and not if the holding constitutes a substantial participation.
6.  Where a company which is a resident of one of the Contracting States derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.”
Article 6
    Paragraphs 1, 2, 4, 7 and 8 of Article VIII of the Convention shall be deleted and be replaced by the following:
 “1.  Interest and other income from bonds, securities, notes, debentures or any other form of indebtedness, whether or not secured by mortgages, derived from sources within one of the Contracting States by a resident of the other Contracting State may, if the recipient is the beneficial owner of the income, not be taxed in the first-mentioned Contracting State at a rate exceeding 15 per cent of the gross amount of such income.”
 “2.  Notwithstanding the provisions of paragraph 1, the tax on interest derived from sources within one of the Contracting States by any financial institution which is a resident of the other Contracting State shall in the first-mentioned State not exceed 10 per cent of the gross amount of the interest, if the recipient is the beneficial owner of the interest and if the enterprise paying the interest engages in an industrial undertaking within the meaning of paragraph 3 of this Article.”
 “4.  The provisions of paragraphs 1 and 2 above shall not apply if the beneficial owner of the interest, being a resident of one of the Contracting States, has in the other Contracting State in which the interest arises, a permanent establishment situated therein, with which the debt-claim from which the interest arises, is effectively connected. In such a case Article III shall apply.”
     “7.  For the purposes of paragraphs 5 and 6 for the term “Government” shall include —
(a)
in the case of Singapore:
(i)
the Monetary Authority of Singapore and the Board of Commissioners of Currency;
(ii)
the Government of Singapore Investment Corporation Pte. Ltd.;
(iii)
the Export Credit Insurance Company of Singapore Limited; and
(iv)
a statutory body;
(b)
in the case of Sweden:
(i)
the Central Bank of Sweden;
(ii)
the National Debt Office;
(iii)
the Export Credit Board; and
(iv)
a commune.”
 “8.  Where, owing to a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship and dealing with each other at arm's length, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.”
Article 7
    Paragraphs 1, 3 and 5 of Article IX of the Convention shall be deleted and be replaced by the following:
 “1.  Royalties derived from sources within one of the Contracting States and paid to a resident of the other Contracting State shall be exempt from tax in the former Contracting State if such resident is the beneficial owner of the royalties.”
 “3.  Sums derived by a resident of one of the Contracting States from sources within the other Contracting State from the alienation of any property from which royalties, as defined in paragraph 2 of this Article, are or may be derived, shall, if such resident is the beneficial owner of the income, be exempt from tax in the other Contracting State.”
 “5.  Where, owing to a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or profits paid, having regard to the use, right, property or information for which they are paid, exceeds the amount of which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship and dealing with each other at arm's length, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payment shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.”
Article 8
    Paragraph 3 of Article XII of the Convention shall be deleted and be replaced by the following paragraphs:
“3.  A resident of one of the Contracting States shall be exempt from tax in the other Contracting State on remuneration for services performed on aircraft in international traffic.
4.  Remuneration derived in respect of an employment exercised on ships operated in international traffic by an enterprise of one of the Contracting States may be taxed in that State.”
Article 9
    In sub-paragraph (b) of paragraph 1 and of paragraph 2 of Article XVI of the Convention the words “7,500 Swedish kronor, or 4,500 Singapore Dollars, as the case may be” shall be deleted and replaced by the words “12,000 Swedish kronor or its equivalent in Singapore Dollars, as the case may be.”
    Paragraph 3 of the said Article shall be deleted and be replaced by the following:
“3.  The benefits under sub-paragraph (b) of paragraph 1 and of paragraph 2 shall extend only for such period of time as may be reasonably or customarily required to complete the education, study, research or training undertaken but shall in no event exceed a period of five consecutive years.
The competent authorities of the Contracting States may agree on such changes of the amounts mentioned in sub-paragraph (b) of paragraph 1 and of paragraph 2 as may be reasonable having regard to changes in the value of money or living expenses, amended legislation in one of the Contracting States or other similar circumstances.”
Article 10
    The opening paragraph of Article XVII of the Convention shall be deleted and be replaced by the following:
“  Where taxes on capital are imposed by both Contracting States the following provisions shall apply —”
Article 11
    The following new Article, XVIIIA, shall be inserted after Article XVIII of the Convention:
“Article XVIIIA
1.  Where this Convention provides (with or without other conditions) that income from sources in Sweden shall be exempt from tax, or taxed at a reduced rate, in Sweden and under the laws in force in Singapore the said income is subject to tax by reference to the amount thereof which is remitted to or received in Singapore and not by reference to the full amount thereof, then the exemption or reduction of tax to be allowed under this Convention in Sweden shall apply only to so much of the income as is remitted to or received in Singapore.
2.  However, this limitation does not apply to income derived by the Government of Singapore or any person approved by the competent authority of Singapore for the purpose of this paragraph. The term “the Government of Singapore” shall include its agencies and statutory bodies.
”
Article 12
1.  Paragraph 4 of Article XIX of the Convention shall be deleted and be replaced by the following:
“4.  Notwithstanding the provisions of paragraph 3 of this Article dividends paid by a company which is a resident of Singapore to a company which is a resident of Sweden shall be exempt from Swedish tax to the extent that the dividends would have been exempt under Swedish law if both companies had been Swedish companies. This exemption shall not apply unless —
(a)
the profits out of which the dividends are paid have been subjected to the normal corporate income tax in Singapore or an income tax comparable thereto, or
(b)
the dividends paid by the company which is a resident of Singapore consists wholly or almost wholly of dividends which that company has received, in the year or previous years, in respect of shares held by it in a company which is a resident of a third State and which would have been exempt from Swedish tax if the shares in respect of which they are paid had been held directly by the company which is a resident of Sweden.”
2.  Paragraphs 5 and 6 of Article XIX of the Convention shall be deleted and be replaced by the following:
“5.  Notwithstanding the provisions of paragraph 3 of this Article, there shall be allowed as a credit against Swedish tax payable in respect of the following items of income from sources within Singapore in the case of —
(a)
dividends, an amount of 15 per cent of the net amount of dividends received. If, however, Singapore imposes in accordance with the provisions of paragraph 2(b) of Article VII, a tax on dividends in addition to the tax chargeable in respect of the profits or income of the company paying such dividends, there shall be credited an amount of 15 per cent of the gross amount of the dividends received;
(b)
interest, within the meaning of paragraphs 1 and 2 of Article VIII, an amount of 15 per cent of the gross amount of the interest received.
The deductions in either case shall not, however, exceed that part of the Swedish income tax as computed before the deduction is given which is appropriate to the dividends or interest, as the case may be. The provisions of this paragraph shall apply until 31st December 1985. The competent authorities shall consult each other in order to determine whether the provisions of this paragraph shall be applicable after that date.
6.  Notwithstanding the provisions of paragraph 3 of this Article, where royalties as defined in paragraph 2 of Article IX are derived by a resident of Sweden from sources within Singapore, 50 per cent of the amount of such royalties shall be taxable in Sweden and the remaining 50 per cent of such amount shall be exempt from Swedish tax until 31st December 1985. The competent authorities shall consult each other in order to determine whether the provisions of this paragraph shall be applicable after that date.”
3.  The following provisions will form paragraphs 7-9 of Article XIX of the Convention:
“7.  For the purposes of paragraph 3 of this Article, the term “Singapore tax payable” shall be deemed to include Singapore tax which would have been paid on business income as referred to in Article III or income from the provision of services as referred to in Article XII but for the exemption or reduction of tax granted under the incentive provisions contained in Singapore laws designed to promote economic development.
8.  For the purposes of paragraph 4 of this Article the term “normal corporate income tax in Singapore or an income tax comparable thereto” shall be deemed to include Singapore income tax which would have been paid but for the exemption or reduction of tax granted under the incentive provisions contained in Singapore laws designed to promote economic development.
9.  The provisions of paragraphs 7 and 8 shall apply until 31st December 1985. The competent authorities shall consult each other in order to determine whether the provisions of these paragraphs shall be applicable after that date.”
4.  The present paragraph 7 of Article XIX of the Convention will form paragraph 10.
Article 13
1.  This Protocol shall be ratified by Sweden and Singapore in accordance with their respective legal procedures, and shall enter into force on the date of exchange of the instruments of ratification.
2.  The provisions of this Protocol shall have effect:
(A)
with respect to paragraph 2 of Article 12:
(a)
in the case of Sweden, in respect of income derived on or after 1st January 1981;
(b)
in the case of Singapore, for any year of assessment beginning on or after 1st January 1982.
(B)
with respect to Articles 2 and 3:
(a)
in the case of Sweden, in respect of income derived on or after 1st January 1982;
(b)
in the case of Singapore, for any year of assessment beginning on or after 1st January 1983.
(C)
with respect to all other provisions:
(a)
in the case of Sweden, in respect of income derived on or after 1st January in the calendar year next following that in which the exchange of instruments of ratification takes place and in respect of capital assessed on or after 1st January in the second calendar year following that in which the exchange of instruments of ratification takes place;
(b)
in the case of Singapore, for any year of assessment beginning on or after 1st January in the second calendar year following that in which the exchange of instruments of ratification takes place.
Article 14
    This Protocol shall remain in force as long as the Convention remains in force.
    IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Protocol.
     DONE at Singapore, this 28th day of September of the year 1983, in duplicate in the English language.
   The Agreement came into force on 14th December 1983, pursuant to an exchange of the instruments of ratification between the Government of the Republic of Singapore and the Government of the Kingdom of Sweden.
For the Government of
the Republic of Singapore:
For the Government of
the Kingdom of Sweden:
HSU TSE-KWANG
KURT MALMGREN
[G.N. No. S 19/84]

LEGISLATIVE HISTORY

Income Tax (Singapore — Sweden) (Avoidance of Double Taxation Agreement) (Supplementary) Order 1984
(CHAPTER 134, O 27C)
This Legislative History is provided for the convenience of users of the Income Tax (Singapore — Sweden) (Avoidance of Double Taxation Agreement) (Supplementary) Order 1973. It is not part of this Order.
1.  
G. N. No. S 19/1984—Income Tax (Singapore — Sweden) (Avoidance of Double Taxation Agreement) (Supplementary) Order 1984
Date of commencement
:
1 February 1984
2.  
1990 Revised Edition—Income Tax (Singapore — Sweden) (Avoidance of Double Taxation Agreement) (Supplementary) Order 1984
Date of operation
:
25 March 1992