Singapore – USA Transport Tax Agreement (1988)

Transportation Tax Agreement (1988)

This Treaty was signed on July 28, 1988 and entered into force on July 28, 1988.

The Ministry of Foreign Affairs of Singapore to the America Embassy

MFA 560/88

The Ministry of Foreign Affairs of the Republic of Singapore presents its compliments to the Embassy of the United States of America and has the honour to propose that the two Governments conclude an agreement to exempt from income tax, on a reciprocal basis, income derived by residents of the other country from the international operation of ships or aircraft. The terms of the agreement are as follows:

The Government of the Republic of Singapore agrees to exempt from tax gross income derived from the international operation of ships or aircraft by US citizens (who are not residents of the Republic of Singapore) and corporations organized in the United States (other than corporations which are subject to tax by the Republic of Singapore on the basis of residence), This exemption is granted on the basis of equivalent exemptions granted by the United States to individuals who are residents of the Republic of Singapore (other than US citizens) and corporations which are controlled and managed in the Republic of Singapore (other than corporations organized in the United States).

In the case of a corporation, the exemption shall apply only if the corporation meets either of the following conditions:

(I) More than 50 percent of the value of the corporation’s stock is owned, directly or indirectly, by individuals who are citizens of the United States or of another country which grants a reciprocal exemption to residents (both individuals and corporations) of the Republic of Singapore; or

(II) The corporation’s stock is primarily and regularly traded on an established securities market in the United States, or is wholly-owned by a corporation whose stock is so traded and which is also organized in the United States. For the purposes of sub-paragraph (1), the Government of the United States of America will be treated as an individual resident of the United States of America.

Gross income includes all income derived from the operation of ships or aircraft, including:

(I) Income from the rental of ships or aircraft used in international transport on a full (time or voyage) or bareboat basis;

(II) Income from the rental of containers and related equipment used in inter-national transport which is incidental to income from the international operation of ships or aircraft;

(III) Income from the participation in shipping or air transport pools which engage in international operation of ships or aircraft; and

(IV) Gains from the alienation of ships or aircraft by a person whose predominant activity is the international operation of ships or aircraft.

The Ministry of Foreign Affairs considers that this note, together with the Embassy’s reply note confirming that the Government of the United States of America agrees to these terms, constitute an agreement amending the agreement of 24 March 1988. This agreement shall enter into force on the date of the Embassy’s reply note and shall have effect with respect to taxable years beginning on or after 1 January 1987.

If any difficulty or doubt as to the interpretation or application of this agreement should arise, the competent authorities of the two countries shall seek to resolve such difficulty or doubt by mutual agreement. For this purpose, the competent authorities are:

(A) In the United States, the Secretary of the Treasury or his authorised representative; and (B) In Singapore, the Minister for Finance or his authorised representative.

Either government may terminate this agreement by giving written notice of termination through diplomatic channels.

The Ministry of Foreign Affairs of the Republic of Singapore avails itself of this opportunity to renew to the Embassy of the United States of America the assurances of its highest consideration.

SINGAPORE
5 July 1988
Embassy of the United States of America
Singapore

The American Embassy to the Ministry of Foreign Affairs of Singapore

No. 297/88

The Embassy of the United States of America presents its compliments to the Ministry of Foreign Affairs of the Republic of Singapore and has the honor to acknowledge receipt of the Ministry’s note no. 560/88 dated July 5, 1988, proposing the terms of an amended agreement to exempt from income tax, a reciprocal basis, income derived by residents of the other country from the international operation of ships or aircraft. The terms of the agreement are as follows:

The Government of the United States of America, in accordance with Sections 872(B) and 883(A) of the Internal Revenue Code, agrees to exempt from tax gross income derived from the international operation of ships or aircraft by individuals who are residents of the Republic of Singapore (other than U.S. citizens) and corporations which are controlled and managed in the Republic of Singapore (other than corporations organized in the United States). This exempt tion is granted on the basis of equivalent exemptions granted by the Republic of Singapore to citizens of the United States (who are not residents of the Republic of Singapore) and to corporations organized in the United States (which are not subject to tax by the Republic of Singapore on the basis of residence).

In the case of a corporation, the exemption shall apply only if the corporation meets either of the following conditions:

(I) More than 50 percent of the value of the corporation’s stock is owned, directly or indirectly, by individuals who are residents of the Republic of Singapore or of another country which grants a reciprocal exemption to U.S. citizens and corporations; or

(II) The corporation’s stock is primarily and regularly traded on an established securities market in the Republic of Singapore, or is wholly-owned by a corporation whose stock is so traded and which is also organized in the Republic of Singapore.

For the purposes of sub-paragraph (I), the Government of the Republic of Singapore will be treated as an individual resident of the Republic of Singapore. For purposes of the exemption from U.S. tax, sub- paragraph (I) will be considered to be satisfied if the corporation is a “controlled foreign corporation” under the Internal Revenue Code.

Gross income includes all income derived from the operation of ships or aircraft, including:

(I) Income from the rental of ships or aircraft used in international transport on a full (time or voyage) or bareboat basis;

(II) Income from the rental of containers and related equipment used in international transport which is incidental to income from the international operation of ships or aircraft;

(III) Income from the participation in shipping or air transport pools which engage in international operation of ships or aircraft; and

(IV) Gains from the alienation of ships or aircraft by a person whose predominant activity is the international operation of ships or aircraft.

The Embassy of the United States of America is pleased to confirm that the Ministry’s note and this reply note constitute an agreement amending the agreement of March 24, 1988. This agreement shall enter into force on today’s date and shall have effect with respect to taxable years beginning on or after 1 January 1987.

If any difficulty or doubt as to the interpretation or application of this agreement should arise, the competent authorities of the two countries shall seek to resolve such difficulty or doubt by mutual agreement. For this purpose, the competent authorities are:

(A) In the United States, the Secretary of the Treasury or his authorized representative; and

(B) In Singapore, the Minister for Finance or his authorized representative.

Either Government may terminate this agreement by giving written notice of termination through diplomatic channels.

The Embassy of the United States of America avails itself of this opportunity to renew to the Ministry of Foreign Affairs the assurances of its highest consideration.

Embassy of the United States of America
Singapore, July 28, 1988