Income Tax (Singapore — Papua New Guinea) (Avoidance of Double Taxation Agreement) (Modifications to Implement Multilateral Instrument) Order 2023

This Income Tax (Singapore — Papua New Guinea) (Avoidance of Double Taxation Agreement) (Modifications to Implement Multilateral Instrument) Order 2023 was published on Singapore Statutes Online, the official government platform for publicizing legal documents. The order modifies the original double tax agreement (DTA) signed between the two nations to adopt provisions to transpose the „Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting [of (large) multinational firms]“ which was agreed upon in Paris in 2016. The order thereby makes three key changes to the existing tax agreement which was implemented via the Income Tax (Singapore — Papua New Guinea) (Avoidance of Double Taxation Agreement) Order 1992:
(1) a modification of the preamble to include in the purpose statement „without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty‑shopping arrangements aimed at obtaining reliefs provided in this Agreement for the indirect benefit of residents of third jurisdictions)“;
(2) the addition of new Articles 26A to 26G to provide for an arbitration procedure in case of disputes over tax matters, including provisions on the appointment of arbitrators, the payment of related costs, the conclusion of tax manners prior to the conclusion of the arbitration, the arbitration procedure itself, and several others;
(3) the addition of new Article 28A to set out a provision for the prevention of a treaty abuse. Specifically, the Article states that the double taxation income tax relief shall not be granted in cases where the sole purpose of an entity or person was / is to take advantage of such tax relief for purposes of saving taxes (unless such action is in accordance with the objective of the agreement).