Singapore has ratified the Double Tax Agreement (DTA) earlier signed between the country and Nigeria. See link to our previous tax alert.
The DTA is based on the OECD Model Tax Convention and enters into force in Singapore on 1 November 2018 with an effective date of 1 January 2019. In addition to reduced tax rates such as in the case of withholding tax on certain income, the protocol to the DTA also provides for non-discrimination. This means any benefit such as lower tax rate contained in the treaty will override the provisions of the domestic law and at the same time if the domestic laws subsequently provide for rates that are lower than the DTA, the lower domestic rates will apply.
Both Nigeria and Singapore have signed up to the OECD’s new Multilateral Instrument (Action 15 of the Base Erosion and Profit Shifting) to amend their tax treaties. Accordingly, the DTA will eventually be amended to incorporate any new measures designed to curb base erosion and profit shifting.
The treaty is yet to be ratified in Nigeria by the National Assembly which is required to give the treaty the force of law in Nigeria.
Watch this space for future development on the subject.