Tax treaty with Singapore is being amended, says Arun Jaitley
The Government has set its eyes on the tax treaty with Singapore.
Finance Minister Arun Jaitley on Monday said that the government is in talks with Singapore to mend the tax treaty with the country. Just like the treaty that was amended with Mauritius, this one too, is expected to curb black money flow into India and force investors to pay legitimate tax in the country.
Jaitley said, "The negotiation for revising tax treaty with Singapore is going on. I cannot give a time frame for when it will be completed."
Earlier this month, India and Mauritius reworked on the tax treaty between the two which now allows India to tax capital gains arising out of investments made through Mauritius, gains from sale of assets and profits made by Mauritian companies in India.
Hasmukh Adhiya, Revenue Secretary, Government of India, had said, capital gains on shares for Singapore can also now become source-based due to direct linkage of Singapore DTAA Clause with Mauritius DTAA.”
On the Mauritius treaty, he had said, "The treaty amendment brings about a certainty in taxation matters for foreign investors. He said, “It reinforces India's commitment to OECD-BEPS initiative of stopping 'double non-taxation' enjoyed by companies.”
According to the amendment, capital gains tax will apply to investments made from April 1, 2017 and will be imposed at 50% of the domestic rate till March 31, 2019. Following this date, tax at a full rate will be applicable. This feature of phased taxation will be available to only those companies who have invested at least $40,500 in Mauritius, the government said.
Edelweiss Research, in a note said, “New treaty clause will also apply in case of Singapore DTAA as it has similar clauses. Mauritius and Singapore account for nearly 45-50% of FDI infow in India. Similar treaty alterations could happen with Cyprus.”