The Singapore springboard for investing in India
18 January 2011
Recent Indian tax developments in India may push some investors to shelve traditional strategies and consider other alternative locations such as Singapore for holding Indian investments. Ong Sim Ho and Chow Hoe Keong of Drew & Napier discuss that tax treaty abuses and legislative changes have caused reactive changes to the status quo, and these developments will eventually reshape existing investment strategies into India.
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Many still see Singapore as the ideal stepping stone for investment into India
Photographer: JeCCo |
Singapore became an enhanced platform for investments into India with the implementation of the Comprehensive Economic Cooperation Agreement (CECA) in 2005. Such was the CECA's success that Singapore is now almost as popular as Mauritius, the traditional favourite choice of jurisdiction for foreign direct investments into India.
The significant tax impact of the CECA was the changes introduced to Article 13 (capital gains) of the India-Singapore Double Taxation Agreement (ISDTA) by the Protocol amending the ISDTA which came into force on August 1 2005 (the protocol). The protocol called for capital gains (other than capital gains derived from the alienation of properties mentioned in Articles 13(1), 13(2) and 13(3) of the ISDTA) to be taxable only in the contracting state for which the resident deriving the capital gains is resident. This means that the capital gains...
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