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

This Income Tax (Singapore — Romania) (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 tax agreement 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 done in Paris in 2016. The order thereby makes two key changes to the existing tax agreement:
(1) 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)“; and
(2) the addition of new Article 29A 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).
Additionally, the order removes two separate provisions in the „interest income“ article (article 11) and the „royalties“ article (article 12) as regards the disapplication of both articles, if the sole purpose was / is to take advantage of the tax relief for purposes of saving taxes, as these provisions are now stipulated in new Article 29A.