July 1, 2022
Brazil ratifies income tax treaty with Singapore, making treaty fully effective
The treaty generally affects withholding taxes and other income taxes. For taxpayers in Brazil, the treaty's effective date may prove controversial.
In Decree 11,109, dated June 29, 2022, Brazil promulgated its income tax treaty with Singapore, which was previously signed in 2018. As Singapore already ratified the treaty, Brazil's promulgation is the final step in making the treaty fully effective.
Effective dates of Brazil-Singapore treaty
Article 30 governs the treaty's effective dates. For Brazilian taxpayers, the treaty applies to withholding taxes on income paid, remitted or credited on or after the first day of January following the date upon which the treaty enters into force. It also applies to other taxes on income arising in tax years beginning on or after the first day of January following the date upon which the treaty enters into force.
For taxpayers in Singapore, the treaty applies to withholding taxes on amounts paid, deemed to be paid or liable to be paid (whichever is earliest) on or after January 1 of the calendar year following the year in which the treaty enters into force. It also applies to other taxes on income arising in a year of assessment beginning on or after January 1 of the second calendar year following the year in which the treaty enters into force.
The Brazilian decree's preamble considers December 1, 2021, to be the date the treaty enters into force for purposes of Article 30. Following this approach, controversy could arise over whether the treaty is effective in Brazil beginning January 1, 2023, June 30, 2022 or even retroactively to January 1, 2022, especially since Brazilian law only considers international tax treaties effective for domestic purposes following publication of a presidential decree.
For details on the treaty's provisions, see Tax Alert 2018-1151.