Malaysia-Singapore DTAA: Double Tax Avoidance Agreement

The Malaysia-Singapore DTAA eliminates double taxation in both countries by providing tax relief to residents of Singapore and Malaysia. This article will highlight the important provisions of the Malaysia-Singapore DTAA, its tax applicability, tax rates, scope of the agreement, and other advantages of this DTAA.
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Malaysia-Singapore DTAA: Double Tax Avoidance Agreement
singapore-malaysia double tax treaty

Malaysia and Singapore have robust, multifaceted economic and financial links that span bilateral trade, investment, and tourism. This relationship is undergirded by a rich shared cultural and political history.

To deepen economic ties, the two countries have implemented a Double Tax Avoidance Agreement (DTAA) in 1968. The agreement was modified in 2004; these modifications came into force in 2007 for both Singapore and Malaysia. This agreement has significantly contributed to the improvement of trade and investment between Singapore and Malaysia. Thus, if you consider starting business in Singapore from Malaysia, the DTA will facilitate this process.

analysis of singapore-malaysia dta

What Is the DTAA between Malaysia and Singapore?

In international trade and investment, double taxation occurs when the same income is taxed in two different countries. This can happen when the income of a taxpayer flows between two countries. Since different countries have their own tax laws, such income flows can become subject to taxation in both countries, thereby penalizing the taxpayer. One of the most effective mechanisms to address this problem is an DTAA. It is essentially an agreement between two countries that specifies which country has the right to tax. The key objective behind such an agreement is to ensure that, while there is no tax evasion, taxpayers are not penalized through double payment of tax. In fact, to encourage trade between the two countries, the DTAA often provides for reduced net taxation.

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Scope of Malaysia-Singapore DTAA

The Malaysia-Singapore DTAA applies to all residents (individuals and legal entities) of either one, or both of the countries. Thus, if you are a resident of Singapore, Malaysia, or both then you can avail the provisions of this DTAA.

What Taxes Will I Owe Under the Malaysia-Singapore Double Tax Agreement?

The tax you owe will depend on the country where you have to pay the tax which further depends on the type of income involved, and the maximum rate specified (if any) in the DTAA for that type of income. The key provisions of the Malaysia-Singapore DTAA are described in the following sections.

Malaysia-Singapore Double Tax Avoidance Agreement at a Glance

The following table states the types of income or payments made and the contracting state where the income is taxed. This is important since the place of taxation will determine the rate of tax applicable to that type of income under the DTAA.

Type of income or payment

Where it is taxed

Income from immovable property

Taxed in the state where the property is situated

Permanent establishment income

Taxed in the country where the PE is situated and carries out its business, but only on the amount attributable to that PE.

Profits from shipping and air transport

Profits derived from the operation of ships and aircraft in international traffic by an enterprise that is resident of Country A, shall be taxable only in that country.


Taxed in the country where the recipient resides.


Taxed in the country where the recipient resides.


Taxed in the country where the recipient resides.

Technical fees

Taxed in the country from which the fees are derived. The tax shall not exceed 5 % of the gross amount of the technical fees.

Independent personal services

Taxed in the country where the recipient resides unless he has a fixed base
regularly available to him in the other country for the purpose of performing his or her activities.

Dependent personal services

The salary, wage, and remuneration is taxed in the state where the recipient resides unless the employment is exercised in the other state. However, some exceptions are applicable.

Directors’ fees

Taxed in the state where the company (paying the directors’ fees) resides.

Income of artists and sports persons

Taxed in the state where activities are performed

Pensions and other similar remuneration (including any annuity)

Taxed in the country where the recipient resides.

Government payments

Taxed by the government of that country unless the individual is a resident of the other country where he performs the services.

Payments to students and trainees

Taxed in the country where they reside. Exempt from tax in the country of education on:

  • All remittances from abroad for the purposes of his maintenance, education, study, research, or training; and
  • The amount of such grant, allowance, or award.

Teachers, professors, and researchers

Tax-exempt in the country where the individual performs teaching or research on any remuneration for such activity which is subject to tax in the country where he resides. Applies only if such teaching or research is for a period not more than two years and not for private interest.

Protect Your Income From Excessive Taxation

To effectively grow your business and maximize profits, it’s essential to understand the tax benefits available to you and your business. If you’re considering incorporating your company in Singapore, can help you navigate the process by helping select the correct corporate structure that will minimize your taxes while fully complying with all government laws, regulations, and DTAAs.
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