Thailand-Singapore DTAA: Tax Treaty Guide with Examples
A Double Taxation Avoidance Agreement (DTAA) is a bilateral treaty that allocates taxing rights between two countries, ensuring that income is not taxed twice on the same earnings. For individuals and businesses operating across Singapore and Thailand, this agreement provides legal certainty on how various types of income such as business profits, dividends, interest, royalties, capital gains, and employment income will be taxed.
This guide is designed for:
- Individuals who are tax residents of either Singapore or Thailand and earn income from the other country.
- Companies engaged in cross-border trade, services, or investments between Singapore and Thailand.
If you are considering expanding your business into Singapore, our Singapore Company Registration guide offers a step-by-step overview of setting up operations in the city-state, including compliance requirements and tax considerations.
This article covers the following topics of the Singapore-Thailand DTAA:
- Purpose & Scope of the Agreement
- Key Terms
- Tax on Business Profits
- Tax on Dividends
- Tax on Interest Income
- Tax on Royalties
- Tax on Personal Services
- Tax on Director Fee
as well as
Thailand-Singapore DTAA: Purpose & Scope
The Singapore–Thailand DTAA aims to eliminate the risk of the same income being taxed in both countries and to prevent fiscal evasion. It achieves this by allocating taxing rights between Singapore and Thailand in a manner that avoids overlapping tax claims, while also including measures to prevent treaty abuse introduced through the Multilateral Instrument (MLI) effective 1 July 2022.
Persons Covered
The agreement applies to persons who are residents of one or both countries (Article 1). This includes:
- Individuals who are liable to tax in either country under national regulations based on domicile, residence, place of management, incorporation, or similar criteria.
- Companies and other entities treated as taxable units under the respective domestic tax laws.
Taxes Covered
Under Article 2, the DTAA applies to income taxes imposed by both countries, regardless of how they are levied. Specifically:
- In Singapore: Income tax.
- In Thailand: Income tax and petroleum income tax.
The treaty also applies to any identical or substantially similar taxes introduced after the agreement was signed.
The DTAA covers a wide range of income sources, including business profits, dividends, interest, royalties, capital gains, employment income and income from independent services, director’s fees, pensions, government service remuneration, artistes' and sportspersons’ income, and students’ income.
For a deeper understanding of the Singapore tax environment, you can explore our guides on the Singapore Tax System, Singapore Corporate Tax, and Singapore Personal Tax, which explain how domestic rules interact with treaty provisions.
Thailand-Singapore DTAA: Key Terms Defined
Person
Tax Resident
Permanent Establishment (PE)
Withholding Tax
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Thailand–Singapore DTAA: Tax on Business Profits
How business profits are taxed under the treaty
Under Article 7 of the Singapore–Thailand DTAA, business profits of an enterprise are taxable only in the country of residence unless the enterprise carries on business in the other country through a permanent establishment (PE) situated there. If a PE exists, only the profits attributable to that PE may be taxed in the other country.
This rule prevents both countries from taxing the same business income in full, while ensuring that profits linked to real economic activity in the source country can still be taxed there.
Below are practical illustrations assuming S$500,000 profit:
1. Singapore company earning income from Thailand without a PE in Thailand
- Applicable rule: Article 7(1). Profits are taxable only in Singapore.
- Tax impact: Thailand cannot tax the profits since no PE exists. The entire S$500,000 is taxable in Singapore under its domestic corporate tax rules.
- Result:
- Tax in Thailand: Nil
- Tax in Singapore: S$500,000 × 17% = S$85,000
2. Singapore company earning income from Thailand with a PE in Thailand
- Applicable rule: Article 7(1) and (2). Profits attributable to the PE are taxable in Thailand.
- Assumption: Out of S$500,000, S$300,000 is attributable to the Thai PE, while S$200,000 remains taxable in Singapore.
- Tax impact:
- Tax in Thailand: S$300,000 × 20% = S$60,000
- Tax in Singapore: S$200,000 × 17% = S$34,000
- Singapore grants a credit for Thai tax paid under Article 22 to avoid double taxation
3. Thai company earning income from Singapore without a PE in Singapore
- Applicable rule: Article 7(1). Profits are taxable only in Thailand.
- Tax impact: Singapore has no right to tax since the Thai company has no PE. The full S$500,000 is taxable in Thailand under Thai corporate tax rules.
- Result:
- Tax in Singapore: Nil
- Tax in Thailand: S$500,000 × 20% = S$100,000
4. Thai company earning income from Singapore with a PE in Singapore
- Applicable rule: Article 7(1) and (2). Profits attributable to the PE are taxable in Singapore.
- Assumption: Out of S$500,000, S$350,000 is attributable to the Singapore PE, and S$150,000 remains taxable in Thailand.
- Tax impact:
- Tax in Singapore: S$350,000 × 17% = S$59,500
- Tax in Thailand: S$150,000 × 20% = S$30,000
- Thailand grants credit for Singapore tax paid under Article 22
Thailand–Singapore DTAA: Tax on Dividends
How dividends are taxed under the treaty
Article 10 of the Singapore–Thailand DTAA governs the taxation of dividends. Dividends paid by a company that is a resident of one country to a resident of the other may be taxed in the recipient’s country of residence. However, they may also be taxed in the source country, subject to a maximum withholding tax rate of 10 percent of the gross dividend amount if the recipient is the beneficial owner.
In addition, Article 10A permits Thailand to impose a branch remittance tax on profits repatriated by a branch to its head office, capped at 10 percent. Singapore does not levy a branch remittance tax.
Below are practical examples using S$500,000 dividends:
Dividends paid by a Singapore company to a Thai resident person
- Singapore does not impose withholding tax on dividends. The Thai resident will be taxed in Thailand on receipt of S$500,000 according to Thai domestic law.
- Tax in Singapore: Nil
- Tax in Thailand: S$500,000 × 10% = S$50,000 (assuming maximum DTAA rate for individuals or companies)
Dividends paid by a Thai company to a Singapore resident person
- Thailand may impose withholding tax on the dividend, capped at 10 percent under Article 10. Singapore taxes residents on worldwide income but grants a credit for Thai tax paid.
- Tax in Thailand: S$500,000 × 10% = S$50,000
- Tax in Singapore: S$500,000 × 17% = S$85,000, less credit of S$50,000 for Thai withholding tax. Net Singapore tax payable: S$35,000
For more details on how cross-border dividends are taxed under local rules, refer to our Singapore Withholding Tax Guide.
Thailand–Singapore DTAA: Tax on Capital Gains
How capital gains are taxed under the treaty
The main rule under Article 13 of the Singapore–Thailand DTAA is that capital gains are taxable only in the country of residence of the seller. This means that if a Singapore resident sells an asset, the gain is normally taxable only in Singapore, and if a Thai resident sells an asset, the gain is normally taxable only in Thailand.
There are specific exceptions to this rule:
- Gains from immovable property may be taxed in the country where the property is located.
- Gains from shares that derive at least three-quarters of their value from immovable property in the other country may also be taxed in that other country.
- Gains connected to a permanent establishment or a fixed base may be taxed in the country where that establishment or base is located.
- Gains from ships and aircraft operated in international traffic are taxable only in the country of residence of the operator.
Examples with S$500,000 capital gain
Sale of Thai shares by a Singapore resident
- Applicable rule: Article 13(2). Since the shares derive most of their value from immovable property in Thailand, the gain may be taxed in Thailand.
- Tax impact:
- Tax in Thailand: Subject to progressive PIT rates, up to 30% at this income level
- Tax in Singapore: Taxable on worldwide income, but a credit is granted for Thai tax paid under Article 22. Net Singapore tax payable may be Nil if the credit fully offsets liability.
Sale of Singapore shares by a Thai resident
- Applicable rule: Article 13(5). Since the gain is not linked to immovable property or a permanent establishment, it is taxable only in the country of residence of the seller, which is Thailand.
- Tax impact:
- Tax in Singapore: Nil, because Singapore does not levy capital gains tax
- Tax in Thailand: Generally exempt if gains are not remitted into Thailand in the same year; otherwise taxed under Thai PIT up to 30%.
Thailand–Singapore DTAA: Tax on Interest Income
How interest income is taxed under the treaty
Article 11 of the Singapore–Thailand DTAA sets out the tax rules for interest income. The main rule is that interest is taxable in the country of residence of the recipient. However, the country where the interest arises may also tax it, but only up to the maximum rates agreed in the treaty.
The treaty provides the following limits on withholding tax in the source country:
- 10 percent if the beneficial owner is a financial institution or an insurance company
- 10 percent if the interest is paid in connection with a sale on credit of equipment, merchandise, or services between unrelated parties
- 15 percent in all other cases
Interest paid to the Government of either country, or to specified institutions such as the Monetary Authority of Singapore or the Bank of Thailand, is exempt from withholding tax.
Examples with S$100,000 interest income
Interest paid by a Singapore company to a Thai resident
- Applicable rule: Article 11(2). Singapore may withhold up to 10 or 15 percent, depending on the nature of the interest. Assume the case is a normal loan (15 percent).
- Tax impact:
- Tax in Singapore: S$100,000 × 15% = S$15,000 withheld at source
- Tax in Thailand: S$100,000 taxable under Thai domestic law, with a credit for Singapore tax paid under Article 22
Interest paid by a Thai company to a Singapore resident
- Applicable rule: Article 11(2). Thailand may withhold up to 10 or 15 percent, depending on the type of interest. Assume it is a loan to a non-financial institution (15 percent).
- Tax impact:
- Tax in Thailand: S$100,000 × 15% = S$15,000 withheld at source
- Tax in Singapore: S$100,000 taxable under Singapore law, but a credit is allowed for Thai tax paid under Article 22
Thailand–Singapore DTAA: Tax on Royalties
How royalty income is taxed under the treaty
Article 12 of the Singapore–Thailand DTAA governs the taxation of royalties. The main rule is that royalties are taxable in the country of residence of the recipient. However, the country where the royalties arise may also tax them, subject to maximum withholding tax limits set out in the treaty.
The treaty caps withholding tax in the source country as follows:
- 5 percent for royalties paid for the use of copyrights (literary, artistic, or scientific works, including films, radio, and television)
- 8 percent for royalties paid for the use of patents, trademarks, designs, models, secret formulas, processes, or industrial, commercial, or scientific equipment
- 10 percent in all other cases
If the royalties are effectively connected with a permanent establishment or fixed base in the source country, they are taxed under business profits or independent services rules instead of the royalty provisions.
Examples with S$100,000 royalty
Royalty paid by a Singapore company to a Thai resident
- Applicable rule: Article 12(2). Singapore imposes 10% withholding tax on royalties paid to non-residents, but the DTAA caps this at lower treaty rates of 5%, 8%, or 10%, depending on the type of royalty. Assume the royalty is for the use of a patent (8 percent).
- Tax impact:
- Tax in Singapore: S$100,000 × 8% = S$8,000 withheld at source
- Tax in Thailand: S$100,000 taxable under Thai law, with a credit for Singapore tax paid under Article 22
Royalty paid by a Thai company to a Singapore resident
- Applicable rule: Article 12(2). Thailand may tax royalties at source within the treaty limits. Assume the royalty is for the use of copyright in a film (5 percent).
- Tax impact:
- Tax in Thailand: S$100,000 × 5% = S$5,000 withheld at source
- Tax in Singapore: S$100,000 taxable under Singapore law, with a credit for Thai tax paid under Article 22
Thailand–Singapore DTAA: Tax on Personal Services
How Independent Services are taxed under the treaty
Article 14 of the Singapore–Thailand DTAA covers income from independent personal services, such as professional or technical work. The main rule is that income from independent services is taxable only in the country of residence of the service provider.
There are two important exceptions:
- If the provider has a fixed base regularly available in the other country, income attributable to that base may be taxed in that country.
- If the provider stays in the other country for 183 days or more within any 12-month period, the income earned from activities there may also be taxed in that country.
Examples with S$100,000 service fee
Services by a Singapore resident to a Thai company
- Applicable rule: Article 14(1). Taxable only in Singapore unless there is a fixed base in Thailand or presence exceeds 183 days.
- Scenario A: No fixed base in Thailand, stay under 183 days.
- Tax in Singapore: tax payable is S$5,650 under resident progressive rates
- Tax in Thailand: Nil
- Scenario B: Fixed base in Thailand or stay exceeds 183 days.
- Tax in Thailand: Subject to progressive PIT rates, reaching up to 30% at this income level (approximate liability around S$25,000 – 30,000 depending on deductions).
- Tax in Singapore: Taxable, but credit for Thai tax paid under Article 22
Services by a Thai resident to a Singapore company
- Applicable rule: Article 14(1). Taxable only in Thailand unless there is a fixed base in Singapore or presence exceeds 183 days.
- Scenario A: No fixed base in Singapore, stay under 183 days.
- Tax in Thailand: Subject to progressive PIT rates, reaching up to 30% at this income level (approximate liability around S$25,000–30,000 depending on deductions).
- Tax in Singapore: Nil
- Scenario B: Fixed base in Singapore or stay exceeds 183 days.
- Tax in Singapore: S$100,000 × 17% = S$17,000 corporate rate or resident individual rates
- Tax in Thailand: Taxable on worldwide income, but credit allowed for Singapore tax paid
How Dependent Services are taxed under the treaty
Article 15 of the Singapore–Thailand DTAA covers income from employment (salaries, wages, and similar remuneration). The main rule is that employment income is taxable only in the country of residence of the employee, unless the employment is exercised in the other country. If the work is performed in another country, the income may be taxed there as well.
There is an exemption when all three of these conditions are met:
- The employee is present in the other country for no more than 183 days within any 12-month period.
- The remuneration is paid by or on behalf of an employer who is not a resident of the other country.
- The remuneration is not borne by a permanent establishment or fixed base of the employer in the other country.
If these conditions are satisfied, only the employee’s country of residence has the right to tax the income.
Examples with S$100,000 salary
Employment by a Singapore resident working in Thailand
- Applicable rule: Article 15(1) and (2).
- Scenario A: Employee works in Thailand for 120 days, employer is Singapore resident, salary not borne by a Thai PE.
- Tax in Singapore: tax payable is S$5,650 under resident progressive rates
- Tax in Thailand: Nil, because the 183-day exemption applies
- Scenario B: Employee works in Thailand for 200 days.
- Tax in Thailand: Thai PIT progressive rates apply, with a marginal rate of 30% at this income level. Approximate liability S$30,000 equivalent
- Tax in Singapore: Taxable under resident rules, but credit is given for Thai tax paid under Article 22
Employment by a Thai resident working in Singapore
- Applicable rule: Article 15(1) and (2).
- Scenario A: Employee works in Singapore for 90 days, employer is Thai resident, salary not borne by a Singapore PE.
- Tax in Thailand: S$100,000 taxable under Thai PIT rules, marginal 30% rate applies, approximate liability S$30,000
- Tax in Singapore: Nil, as the 183-day exemption applies
- Scenario B: Employee works in Singapore for 200 days.
- Tax in Singapore: Employment income taxable. For a non-resident employee, Singapore applies 15% of gross income or resident rates (whichever is higher). On S$100,000, this results in S$15,000
- Tax in Thailand: Worldwide income taxable at progressive rates, marginal 30% at this income level. Approximate liability S$30,000, but a credit is allowed for Singapore tax paid under Article 22
Thailand–Singapore DTAA: Tax on Director Fee
How director fee is taxed under the treaty
Article 16 of the Singapore–Thailand DTAA governs the taxation of director’s fees. The rule is straightforward: director’s fees and similar payments are taxable in the country where the company paying the fees is a resident. This applies even if the director resides in the other country.
Examples with S$100,000 director’s fee
Fee paid by a Singapore company to a Thai resident
- Applicable rule: Article 16. Since the company is resident in Singapore, the director’s fee is taxable in Singapore.
- Tax impact:
- For a non-resident individual, Singapore imposes a flat withholding tax of 24%, resulting in S$24,000.
- Thailand may also tax the income on a worldwide basis, but the Thai resident can claim credit for Singapore tax paid under Article 22.
Fee paid by a Thai company to a Singapore resident
- Applicable rule: Article 16. Since the company is resident in Thailand, the director’s fee is taxable in Thailand.
- Tax impact:
- Thailand taxes director’s fees under its domestic personal income tax system, with progressive rates up to 35%. For S$100,000, this will result in tax of S$25,000 – 30,000.
- Singapore also taxes its residents on worldwide income, but grants a credit for Thai tax paid under Article 22.
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