When your company earns foreign income from a treaty country, you may wish to claim the benefits under the DTA that entitles a company not to pay tax or to pay tax at a reduced rate in the foreign country. To enjoy this benefit, you would need to submit a COR to the foreign country to prove that the company is a Singapore tax resident. To find out more about the application process, please refer to Applying for Certificate of Residence.
When you receive foreign income in Singapore, you may be taxed on the income. In the case where the benefit under the DTA is not an exemption of tax, but a reduction of tax rate, the Singapore company will also suffer tax in the foreign country. In this way, the same income is subjected to taxation twice.
The DTA provides relief for this double taxation by allowing the Singapore company to claim a credit of the foreign tax suffered against its Singapore tax payable on the same income. This credit is known as a double tax relief (DTR). To find out more about this relief, please refer to Claiming Double Tax Relief.