Amended Taiwan–Singapore Tax Treaty to Take Effect from 2027: Attention to Three Major Changes
May 12, 2026
The National Taxation Bureau of Northern Area, Ministry of Finance stated that the newly amended income tax agreement between Taiwan and Singapore officially entered into force on February 13, 2026, and will apply starting January 1, 2027. For taxes withheld at source, the agreement will apply to income paid on or after January 1, 2027. For other taxes, it will apply to taxable periods beginning on or after January 1, 2027. The new agreement will fully replace the original agreement signed in 1981 and provide more appropriate tax relief and preferential treatment.
The Bureau further explained that the new agreement was revised in consideration of the development of bilateral economic and trade relations and with reference to the tax convention models published by the Organisation for Economic Co-operation and Development (OECD) and the United Nations (UN). The major amendments are summarized as follows:
1. Reduced Withholding Tax Rates on Passive Income
The new agreement reduces the maximum withholding tax rates on dividends and royalties to 10%, replacing the original agreement’s rates of up to 40% for dividends and 15% for royalties. In addition, a new 10% cap on interest withholding tax has been introduced, while certain qualified entities may enjoy exemption from interest taxation. These changes are expected to reduce tax costs associated with cross-border transactions and investments between the two jurisdictions.
2. Revised Permanent Establishment (PE) Thresholds
Under the new agreement, the threshold for construction sites, building projects, installation, or assembly activities to constitute a permanent establishment has been revised from “an aggregate period exceeding six months within one year” to “a continuous period exceeding nine months.”
In addition, the agreement introduces a service permanent establishment provision, under which the furnishing of services for a period exceeding 183 days in any twelve-month period, whether continuously or in aggregate, may constitute a permanent establishment subject to taxation on attributable profits.
3. Three-Year Transition Period for Tax Credit Incentives
Considering the need to align Taiwan’s double taxation relief mechanisms with those adopted under other effective tax treaties and to provide businesses with reasonable time to adapt to the new regime, the new agreement provides transitional tax credit mechanisms for “indirect foreign tax credits” and “tax sparing credits.”
These preferential tax credit arrangements will sunset after three years of application and will only apply to corporate income tax filings for fiscal years 2027 through 2029. Beginning from fiscal year 2030, these incentives will cease to apply.
The Bureau specifically reminds enterprises to pay close attention to the revised provisions and applicable periods under the new agreement and to make appropriate adjustments in a timely manner in order to safeguard their interests.
For further information, taxpayers are welcome to visit the Bureau’s website for relevant regulations or contact the toll-free service hotline at 0800-000321. The Bureau will be pleased to provide consultation services.
(Contact person: Chief Su, Corporate Income Tax Division, Tel: +886-3-3396789-1310)
Translated by inFINIty Consulting Inc.
