On June 30, Decree No. 11,109/2022 was sanctioned by the President of the Republic, enacting an agreement to eliminate double taxation with regard to income taxes and prevent tax evasion and avoidance and its protocol, signed in Singapore on May 7, 2018.
Among the rules agreed between the Federative Republic of Brazil and the Republic of Singapore, we highlight the following:
(i) The provisions of the agreement applies to persons residing in one or both States, and all those levied on total income or elements of income will be considered as income taxes;
(ii) The incomes that a resident of a Contracting State derives from immovable property situated in the other Contracting State may be taxed in the other State;
(iii) The profits of an enterprise of a Contracting State shall be taxable only in this State, unless the enterprise carries on business in the other Contracting State and has a permanent establishment in that other State;
(iv) Dividends paid by a company resident in a Contracting State to a resident of the other Contracting State may be taxed in that other State, pursuant to the Decree. The same rationale is applied to interest;
(v) Royalties that origins in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. However, such royalties may also be taxed in the Contracting State from which they originate and in accordance with the legislation of that State, pursuant to the Decree;
(vi) Earnings obtained by a resident of a Contracting State from the alienation of na immovable property situated in the other Contracting State may be taxed in that other State;
(vii) Earnings obtained by a resident of a Contracting State from the alienation of shares in the capital of a company whose assets consist, directly or indirectly, mainly of immovable property situated in the other Contracting State may be taxed in that other State;
(viii) Earnings arising from the alienation of any property from the other Contracting State may be taxed in the other State;
(ix) The income that a resident of a Contracting State derives from the rendering of professional services, or from other activities of an independent character, shall be taxable only in that State, except in the cases stipulated in the Decree;
(x) To avoid double taxation, when a resident of Brazil receives income that can be taxed in Singapore, Brazil will admit as a deduction of the taxes on the income of such resident calculated in Brazil, in an equal amount of the tax paid in Singapore, under the terms brought by the Decree;
(xi) When a person considers that the actions of one or both Contracting States result, or are likely to result, in taxation in breach of the provisions of this Agreement, the person may, regardless of the remedies available under the domestic law of the States, submit the case to the competent authority of the Contracting State of which he is a resident.
Decree no. 11,109/2022 came into effect on the date of its publication, according to art. 3 of the normative.
Additionally, we inform that has already been promulgated an agreement in the same meaning between Brazil and the Arab Emirates, according to Decree no. 10,705/2021.
The Tax Department at Castro Barros Advogados is available to provide any further clarification on this matter.