I. Letter from Mr. Hsu Tse-Kwang, Commissioner of Inland Revenue
of Ministry of Finance, Republic of Singapore, to Mr. Hsueh
Chia-Chuen, Director-General of Taxation Department of
Ministry of Finance, Republic of China.
December 30, 1981
Mr. Hsueh Chia-Chuen
Director-General
Department of Taxation
Ministry of Finance
Republic of China
Dear Mr. Hsueh,
Pursuant to the discussions on the Agreement for the
Avoidance of Double Taxation which will apply to our two
countries, I would like to confirm the following which have
references therein:---
(a) Article 2
The tax referred to in paragraph 2 which applies to
Singapore is income tax.
(b) Article 3
(i) Paragraph 1 (a)--The terms "a territory" and "the other
territory" mean Republic of Singapore or Republic of
China, as the context requires.
(ii) Paragraph 1 (e)--The "competent authority" in the
Singapore context is the Commissioner of Inland Revenue,
Ministry of Finance.
(c) Article 8
"However, the tax so charged shall not exceed 2 per cent of
the gross revenues derived from sources in that other
territory" referred to in paragraph 2 of Article 8 means
that the total amount of income tax, business tax and any
taxes that may be raised in future that are in the nature
of income tax or business tax shall not exceed 2 per cent
of the gross revenues derived from sources in that other
territory.
(d) Article 10
With reference to the dividends tax under paragraph 2 of
Article 10 the following illustrate how the tax is arrived
at:--
Case I: Profits distributed
100% 50%
Profits of a company $ 100 $ 100
Less: Corporate income tax at 35% 35 35
Balance $ 65 $ 65
Dividends declared $ 65 $ 32.5
Maximum dividend tax $ 5 $ 2.5
Case II: 100% 50%
Profits of a company $ 100 $ 100
Less: Corporate income tax at
reduced rate(25%) $ 25
Tax deemed paid* 10 35 35
Balance $ 65 $ 65
Add: Tax deemed paid* 10 10
Balance $ 75 $ 75
Dividends declared $ 75 $ 37.5
Maximum dividend tax $ 5 $ 2.5
*Tax would have been paid but for the reduction of tax rate
under the laws designed to promote economic development.
In other words, the total tax burden of corporate income
tax and dividends tax shall not exceed 40 per cent of the
income or profits of the company out of which the dividends
are declared. This principle would similarly apply where
only part of the income or profits of the company is
declared as dividends.
(e) Article 22
The Agreement shall be effective in Singapore for income
accrued or derived on or after 1st January, 1982.
(f) Article 23
In the event of notice of termination being given in any
calendar year, the Agreement shall cease to be effective in
Singapore for income accrued or derived on or after 1st
January of the calendar year following the year in which
the notice of termination is given.
I am pleased to confirm my acceptance of the Agreement for
the Avoidance of Double Taxation, which forms the Annex to
this Exchange of Letters and which has been initialled by you
and me, to be applicable to Singapore.
Yours sincerely
Hsu Tse-Kwang
Commissioner of Inland Revenue
Ministry of Finance
Republic of Singapore
II. Letter from Mr. Hsueh Chia-Chuen, Director-General of
Taxation Department of Ministry of Finance, Republic of
China, to Mr. Hsu Tse-Kwang, Commissioner of Inland Revenue
of Ministry of Finance, Republic of Singapore.
December 30, 1981
Mr. Hsu Tse-Kwang
Commissioner of Inland Revenue
Ministry of Finance
Republic of Singapore
Dear Mr. Hsu,
I acknowledge the receipt of your letter of December 30,
1981, and would like to confirm the following which have
references in the Agreement for the Avoidance of Double
Taxation between our two countries:--
(a) Article 2
The tax referred to in paragraph 2 which applies to
Republic of China is income tax.
(b) Article 3
(i) Paragraph 1 (a)--The terms "a territory" and "the other
territory" mean Republic of Singapore or Republic of
China, as the context requires.
(ii) Paragraph 1 (e)--The "competent authority" in the
context of Republic of China is the Director-General,
Department of Taxation, Ministry of Finance.
(c) Article 8
"However, the tax so charged shall not exceed 2 per cent of
the gross revenues derived from sources in that other
territory" referred to in paragraph 2 of Article 8 means
that the total amount of income tax, business tax and any
taxes that may be raised in future that are in the nature
of income tax or business tax shall not exceed 2 per cent
of the gross revenues derived from sources in that other
territory.
(d) Article 10
With reference to the dividends tax under paragraph 2 of
Article 10 the following illustrate how the tax is arrived
at:--
Case I: Profits distributed
100% 50%
Profits of a company $ 100 $ 100
Less: Corporate income tax at 35% 35 35
Balance $ 65 $ 5
Dividends declared $ 65 $ 32.5
Maximum dividend tax $ 5 $ 2.5
Case II: 100% 50%
Profits of a company $ 100 $ 100
Less: Corporate income tax at
reduced rate (25%) $ 25
Tax deemed paid* 10 35 35
Balance $ 65 $ 65
Add: Tax deemed paid* 10 10
Balance $ 75 $ 75
Dividends declared $ 75 $ 37.5
Maximum dividend tax $ 5 $ 2.5
*Tax would have been paid but for the reduction of tax rate
under the laws designed to promote economic development.
In other words, the total tax burden of corporate income
tax and dividends tax shall not exceed 40 per cent of the
income or profits of the company out of which the dividends
are declared. This principle would similarly apply where
only part of the income or profits of the company is
declared as dividends.
(e) Article 22
The Agreement shall be effective in the Republic of China
for income accrued or derived on or after 1st January, 1982.
(f) Article 23
In the event of notice of termination being given in any
calendar year, the Agreement shall cease to be effective in
the Republic of China for income accrued or derived on or
after 1st January of the calendar year following the year
in which the notice of termination is given.
I am pleased to confirm my acceptance of the Agreement for
the Avoidance of Double Taxation, which forms the Annex to
this Exchange of Letters and which has been initialled by you
and me, to be applicable to the Republic of China.

Yours sincerely
Hsueh China-Chuen
Director-General
Department of Taxation
Ministry of Finance
Republic of China


AGREEMENT FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT OF TAXES ON INCOME

ARTICLE 1 PERSONAL SCOPE
This Agreement shall apply to persons who are residents of one
or both of the territories.

ARTICLE 2 TAXES COVERED
1. This Agreement shall apply to taxes on income imposed in each
territory irrespective of the manner in which they are levied.
2. The existing taxes which are the subject of this Agreement
are taxes on income as specified in the Exchange of Letters.
3. This Agreement shall also apply to any other taxes of a
substantially similar character which are subsequently
imposed in addition to, or in place of, the existing taxes.
4. If by reason of changes made in the taxation law of either
territory, it seems desirable to amend any article of this
Agreement without affecting the general principles thereof
the necessary amendments may be made by mutual consent by
means of an exchange of letters.

ARTICLE 3 GENERAL DEFINITIONS
1. In this Agreement, unless the context otherwise requires:
(a) the terms "a territory" and "the other territory" are
defined in the Exchange of Letters;
(b) the term "person" comprises an individual, a company and
any other body of persons which is treated as an entity for
tax purposes;
(c) the them "company" means any body corporate or any entity
which is treated as a body corporate for tax purposes;
(d) the terms "enterprise of a territory" and "enterprise of
the other territory" mean respectively an enterprise
carried on by a resident of a territory and an enterprise
carried on by a resident of the other territory;
(e) the term "competent authority" is defined in the Exchange
of Letters;
(f) the term "income or profits of an enterprise" does not
include rents or royalties in respect of literary or
artistic copyrights, motion picture films or of tapes for
television or broadcasting, or of mines, oil wells,
quarries, or other places of extraction of natural
resources or of timber or forest produce, or income in the
form of dividends, interest, rents, royalties or fees or
other remuneration derived from the management, control or
supervision of the trade, business or other activity of
another enterprise or concern, or remuneration for labour
or personal services, or income derived from the operation
of ships or aircraft.
2. As regards the application of this Agreement in either
territory, any term not otherwise defined shall, unless the
context otherwise requires, have the meaning which it has
under the laws in that territory relating to the taxes which
are the subject of this Agreement.

ARTICLE 4 FISCAL DOMICILE
1. For the purposes of this Agreement, the term "resident of a
territory" means any person who is a resident in accordance
with the tax laws in that territory.
2. Where by reason of the provisions of paragraph 1 an
individual is a resident of both territories, then his case
shall be determined in accordance with the following rules:
(a) he shall be deemed to be a resident of the territory in
which he has a permanent home available to him. If he has
a permanent home available to him in both territories, he
shall be deemed to be a resident of the territory with
which his personal and economic relations are closer
(centre of vital interests);
(b) if the territory in which he has his centre of vital
interests cannot be determined, or if he has not a
permanent home available to him in either territory, he
shall be deemed to be a resident of the territory in which
he has an habitual abode;
(c) if he has an habitual abode in both territories or in
neither of them, the competent authorities of the
territories shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person
other than an individual is a resident of both territories,
then it shall be deemed to be a resident of the territory in
which the control and management of its business is exercised.

ARTICLE 5 PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent
establishment" means a fixed place of business in which the
business of the enterprise is wholly or partly carried on.
2. The term "permanent establishment" shall include especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, oil well, quarry of other place of extraction of
natural resources;
(g) a plantation, farm, orchard or vineyard;
(h) building site, construction, installation and assembly
project which exist in the aggregate for more than six
months in a calendar year or for more than six consecutive
months overlapping two calendar years.
3. The term "permanent establishment" shall not be deemed to
include:
(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to
the enterprise;
(b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of
storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of
processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise, or for
collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the
purpose of advertising, for the supply of information, for
scientific research or for similar activities which have a
preparatory or auxiliary character, for the enterprise.
4. An enterprise of a territory, notwithstanding it has no fixed
place of business in the other territory, shall be deemed to
have a permanent establishment in that other territory if it
carries on supervisory activities therein in connection with
construction, installation and assembly project which are
being undertaken in that other territory in the aggregate for
more than six months in a calendar year or for more than six
consecutive months overlapping two calendar years.
5. A person acting in a territory on behalf of an enterprise of
the other territory (other than an agent of an independent
status to whom paragraph 6 applies) notwithstanding he has no
fixed place of business in the first-mentioned territory
shall be deemed to be a permanent establishment in that
territory if --
(a) he has, and habitually exercises a general authority in the
first-mentioned territory to conclude contracts in the name
of the enterprise; or
(b) he maintains in the first-mentioned territory a stock of
goods or merchandise belonging to the enterprise from which
he regularly fills orders on behalf of the enterprise; or
(c) he regularly secures orders in the first-mentioned
territory wholly of almost wholly for the enterprise.
6. An enterprise of a territory shall not be deemed to have a
permanent establishment in the other territory merely because
it carries on business in that other territory through a
broker, general commission agent or any other agent of an
independent status, where such persons are acting in the
ordinary course of their business.
7. The fact that a company which is a resident of a territory
controls or is controlled by a company which is a resident of
the other territory, or which carries on business in that
other territory (whether through a permanent establishment or
otherwise), shall not of itself constitute for either company
a permanent establishment of the other.

ARTICLE 6 INCOME FROM IMMOVABLE PROPERTY
1. Income from immovable property may be taxed in the territory
in which such property is situated.
2. The term "immovable property" shall be defined in accordance
with the law in the territory in which the property in
question is situated. The term shall in any case include
property accessory to immovable property, livestock and
equipment used in agriculture and forestry, rights to which
the provisions of general law respecting landed property
apply, usufruct of immovable property and rights to variable
or fixed payments as consideration for the working of, or the
right to work, mineral deposits, sources and other natural
resources; ships, boats and aircraft shall not be regarded as
immovable property.
3. The provisions of paragraph 1 shall apply to income derived
from the direct use, letting, or use in any other form of
immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the
income from immovable property of an enterprise and to income
from immovable property used for the performance of
professional services.

ARTICLE 7 BUSINESS PROFITS
1. The profits of an enterprise of a territory shall be taxable
only in that territory unless the enterprise carries on
business in the other territory through a permanent
establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be
taxed in the other territory but only so much of them as is
attributable to that permanent establishment.
2. Where an enterprise of a territory carries on business in the
other territory through a permanent establishment situated
therein, there shall in each territory be attributed to that
permanent establishment the profits which it might be
expected to make if it were a distinct and separate
enterprise engaged in the same or similar activities under
the same or similar conditions and dealing wholly
independently with the enterprise of which it is a permanent
establishment.
3. In the determination of the profits of a permanent
establishment, there shall be allowed as deductions expenses
which are incurred for the purposes of the permanent
establishment including executive and general administrative
expenses so incurred, whether in the territory in which the
permanent establishment is situated or elsewhere.
4. No profits shall be attributed to a permanent establishment
by reason of the mere purchase (including transportation) by
that permanent establishment of goods or merchandise for the
enterprise.
5. Where profits include items of income which are dealt with
separately in other Articles of this Agreement, then the
provisions of those Articles shall not be affected by the
provisions of this Article.

ARTICLE 8 SHIPPING AND AIR TRANSPORT
1. Notwithstanding the provisions of Article 7 of this
Agreement, the income or profits of an enterprise of one of
the territories from the operation of aircraft in
international traffic shall be exempt from income tax,
business tax and any taxes that may be raised in the future
that are in the nature of income tax or business tax in the
other territory.
2. The income or profits of an enterprise of one of the
territories from the operation of ships in international
traffic may be taxed in the other territory, but only in so
far as such profits are derived from that other territory.
However, the tax so charged shall not exceed 2 per cent of
the gross revenues derived from sources in that other
territory.
3. The provisions of paragraphs 1 and 2 shall likewise apply to
income or profits arising from participation in shipping or
aircraft pools of any kind by such enterprise engaged in
shipping or air transport.

ARTICLE 9 ASSOCIATED ENTERPRISES
Where---
(a) an enterprise of a territory participates directly or
indirectly in the management, control or capital of an
enterprise of the other territory, or
(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a
territory and an enterprise of the other territory,
and in either case conditions are made or imposed between the
two enterprises in their commercial or financial relations which
differ from those which would be made between independent
enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included
in the profits of that enterprise and taxed accordingly.

ARTICLE 10 DIVIDENDS
1. Dividends arising in a territory and paid to a resident of
the other territory may be taxed in that other territory.
2. However, such dividends may be taxed in the territory in
which they arise, and according to the law of that territory,
but if the recipient who is a resident of the other territory
beneficially owns the dividends, the tax so charged shall not
exceed an amount which together with the corporate income tax
payable on the profits of the company paying the dividends
constitutes 40 per cent of that part of the taxable income
out of which the dividends are declared. The term "corporate
income tax payable" shall be deemed to include the corporate
income tax which would have been paid but for the reduction
or exemption under the laws designed to promote economic
development.
3. Where no dividend tax is imposed in addition to the corporate
income tax on the profits of the company, the provisions of
paragraph 2 shall not apply.
4. The term "dividends" as used in this Article means income
from shares, mining shares, founders' shares or other rights,
not being debt claims, participating in profits, as well as
income from other corporate rights which is subject to the
same taxation treatment as income from shares according to
the taxation law in the territory of which the company making
the distribution is a resident.
5. The provisions of paragraph 2 shall not apply if the
beneficial owner of the dividends, being a resident of a
territory, has in the other territory, of which the company
paying the dividends is a resident, a permanent establishment
with which the holding by virtue of which the dividends are
paid is effectively connected. In such a case, the
provisions of Article 7 shall apply.
6. Where a company which is a resident of a territory derives
profits or income from the other territory, no tax may be
imposed in that other territory on the dividends paid by the
company except insofar as such dividends are paid to a
resident of that other territory or insofar as the holding in
respect of which the dividends are paid is effectively
connected with a permanent establishment in that other
territory, or on the company's undistributed profits even if
the dividends, paid or undistributed profits consist wholly
or partly of profits or income arising in such other
territory.
7. Dividends shall be deemed to arise in a territory if they are
paid by a company resident in that territory.

ARTICLE 11 ROYALTIES
1. Royalties arising in a territory and paid to a resident of
the other territory may be taxed in that other territory.
2. However, such royalties may be taxed in the territory in
which they arise and according to the law of that territory,
but if the recipient who is a resident of the other territory
beneficially owns the royalties, the tax so charged shall not
exceed 15 per cent of the gross amount of the royalties. The
competent authorities of the territories shall by mutual
agreement settle the mode of application of this limitation.
3. The provisions of paragraph 2 of this Article shall likewise
apply to proceeds arising from the alienation of any
copyright of scientific work, any patent, trade mark, design
or model, plan, or secret formula or process.
4. The term "royalties" as used in this Article means payments
of any kind received as a consideration for the use of, or
the right to use, any copyright of scientific work, any
patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial,
commercial or scientific equipment, or for information
concerning industrial or scientific experience.
5. The provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the royalties, being a resident of a
territory, has in the other territory in which the royalties
arise, a permanent establishment with which the right or
property in respect of which the royalties are paid is
effectively connected. In such a case, the provisions of
Article 7 shall apply.
6. Where, owing to a special relationship between the payer and
the beneficial owner or between both of them and some other
person, the amount of the royalties paid, having regards to
the use, right or information for which they are paid,
exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only
to the last-mentioned amount. In such a case, the excess
part of the payments shall remain taxable according to the
law of each territory, due regard being had to the other
provisions of this Agreement.
7. Royalties shall be deemed to arise in a territory when the
payer is a resident of that territory. Where, however, the
person paying the royalties, whether he is a resident of a
territory or not, has in a territory a permanent
establishment in connection with which the obligation to pay
the royalties was incurred, and such royalties are borne by
such permanent establishment, then such royalties shall be
deemed to arise in the territory in which the permanent
establishment is situated.

ARTICLE 12 PERSONAL SERVICES
1. Subject to the provisions of Article 13, 14, 15 and 16,
salaries, wages and other similar remuneration or income for
personal (including professional) services derived by a
resident of a territory, shall be taxable only in that
territory, unless the services are performed in the other
territory. If the services are so performed, such
remuneration or income as is derived therefrom may be taxed
in that other territory.
2. Notwithstanding the provisions of paragraph 1, remuneration
or income derived by a resident of a territory for personal
(including professional) services performed in the other
territory shall be exempt from tax of that other territory if
--
(a) the recipient is present in the other territory for a
period or periods not exceeding in the aggregate 183 days
in the calendar year concerned; and
(b) the remuneration or income is paid by, or on behalf of, a
person who is a resident of the first-mentioned territory;
and
(c) the remuneration or income is not borne by a permanent
establishment which that person has in the other territory.
3. A resident of a territory shall be exempt from tax in the
other territory on remuneration for services performed on
ships or aircraft in international traffic.

ARTICLE 13 DIRECTORS' FEES
1. Directors' fees and similar payments derived by a resident of
a territory in his capacity as a member of the board of
directors of a company which is a resident of the other
territory may e taxed in that other territory.
2. The remuneration which a person to whom paragraph 1 applies
derives from the company in respect of the discharge of
day-to-day functions of a managerial or technical nature may
be taxed in accordance with the provisions of Article 12.

ARTICLE 14 ARTISTES AND ATHLETES
1. Notwithstanding the provisions of Article 12, income derived
by entertainers, such as theater, motion picture, radio or
television artists, and musicians, and by athletes, from
their personal activities as such may be taxed in the
territory in which these activities are exercised.
2. Where income in respect of personal activities exercised by
an entertainer or an athlete in his capacity as such accrues
not to the entertainer or athlete himself but to another
person, that income may, notwithstanding the provisions of
Articles 7 and 12, be taxed in the territory in which the
activities of the entertainer or athlete are exercised.
3. The provisions of paragraph 1 shall not apply to remuneration
or profits, salaries, wages and similar income derived from
activities exercised in a territory by public entertainers if
the visit to that territory is substantially supported by
public funds as recognized by the competent authorities of
both territories.
4. Notwithstanding the provisions of Article 7, where the
activities mentioned in paragraph 1 are provided in a
territory by an enterprise of the other territory the profits
derived from providing these activities by such an enterprise
may be taxed in the first-mentioned territory unless the
enterprise is substantially supported from the public funds
as recognized by the competent authorities of both
territories in connection with the provisions of such
activities.

ARTICLE 15 TEACHERS
1. An individual who is a resident of a territory immediately
before making a visit to the other territory, and who, at the
invitation of any university, college, school or other
similar educational institution, which is recognized by the
competent authority in that other territory, visits that
other territory for a period not exceeding tow years solely
for the purpose of teaching or research or both at such
educational institution shall be exempt from tax in that
other territory on his remuneration for such teaching or
research.
2. The provisions of paragraph 1 shall not apply where his
visits, under one or more contracts with the educational
institutions of the other territory, exceeds two years.

ARTICLE 16 STUDENTS AND TRAINEES
1. An individual, who immediately before visiting a territory,
is a resident of the other territory and is temporarily
present in the first-mentioned territory for the primary
purpose of --
(a) studying at a university, college or school in the
first-mentioned territory, or
(b) securing training required to qualify him to practice a
profession or a professional specialty,
shall be exempt from tax in that territory in respect of--
(i) remittances from the other territory for the purpose of
his maintenance, study or training; and
(ii) any remuneration for personal services rendered in the
first-mentioned territory with a view to supplementing
the resources available to him for such purposes in an
amount not exceeding 5,000 Singapore dollars or 90,000
NT dollars in any calendar year.
2. An individual, who immediately before visiting a territory,
is a resident of the other territory and is temporarily
present in the first-mentioned territory for the primary
purpose of study, research or training solely as a recipient
of a grant, allowance or award from the Government or a
scientific, educational, religious or charitable organization
of one of the territories, shall be exempt from tax in the
first-mentioned territory in respect of--
(a) remittances from the other territory for the purposes of
his maintenance, study, research or training; and
(b) the amount of such grant, allowance or award; and
(c) any remuneration for personal services rendered in the
first-mentioned territory provided such services are in
connection with his study, research or training or
incidental thereto in an amount not exceeding 5,000
Singapore dollars or 90,000 NT dollars in any calendar year.
3. An individual, who immediately before visiting a territory,
is a resident of the other territory and is temporarily
present in the first-mentioned territory for a period not
exceeding twelve months solely as an employee of, or under
contract with, the Government or an enterprise of the
second-mentioned territory for the purpose of acquiring
technical, professional or business experience, shall be
exempt from tax in the first-mentioned territory on--
(a) all remittances from the second-mentioned territory for the
purposes of his maintenance, education or training; and
(b) any remuneration for personal services rendered in the
first-mentioned territory, provided such services are in
connection with his studies or training or are incidental
thereto, in an amount not exceeding 15,000 Singapore
dollars or 270,000 NT dollars.

ARTICLE 17 LIMITATION OF RELIEF
Where this Agreement provides (with or without other conditions)
that income from sources in a territory shall be exempt from
tax, or taxed at a reduced rate in that territory and under the
laws in force in the other territory the said income is subject
to tax by reference to the amount thereof which is remitted to
or received in that other territory and not by reference to the
full amount thereof, then the exemption or reduction of tax to
be allowed under this Agreement in the first-mentioned territory
shall apply to so much of the income as is remitted to or
received in that other territory.

ARTICLE 18 ELIMINATION OF DOUBLE TAXATION
1. Subject to the tax laws in either territory regarding the
allowance as a credit against tax payable in that territory
of tax payable outside that territory, tax payable in a
territory in respect of income derived from that territory
shall be allowed as a credit against tax payable in the other
territory in respect of that income. Where such income is a
dividend paid by a company which is a resident of a territory
to a company which is a resident of the other territory and
which owns not less than 25 per cent of the share capital of
the company paying the dividend, the credit shall take into
account tax payable by the first-mentioned company in respect
of its income. The credit shall not, however, exceed that
part of the tax payable in that other territory as computed
before the credit is given, which is appropriate to such item
of income.
2. The term "tax payable in a territory" shall be deemed to
include the amount of tax which would have been paid if the
tax had not been exempted or reduced in accordance with laws
designed to promote economic development in that territory,
effective on the date of the Exchange of Letters, or which
may be introduced in future in the taxation laws in that
territory in modification of, or in addition to, the existing
laws.

ARTICLE 19 NON-DISCRIMINATION
1. The nationals of a territory shall not be subjected in the
other territory to any taxation or any requirement connected
therewith which is other or more burdensome than the taxation
and connected requirements to which nationals of that other
territory in the same circumstances are or may be subjected.
This provision shall not be construed as obliging the
competent authority of a territory to grant to nationals of
the other territory not resident in the first-mentioned
territory those personal allowances, reliefs and reductions
for tax purposes which are by law available only to nationals
of the first-mentioned territory or to such other persons as
may be specified therein who are not resident in that
territory.
2. The term "nationals" means all individuals possessing the
nationality of either territory and all legal persons,
partnerships, associations and other entities deriving their
status as such from the laws in force in that territory.
3. The taxation on a permanent establishment which an enterprise
of a territory has in the other territory shall not be less
favorably levied in that other territory than the taxation
levied on enterprises of that other territory carrying on the
same activities.
4. The provisions of this Article shall not be construed as
obliging the competent authority of a territory to grant to
residents of the other territory any personal allowances,
reliefs and reductions for taxation purposes on account of
civil status or family responsibilities which are granted to
the residents of the first-mentioned territory.
5. Enterprises of a territory, the capital of which is wholly or
partly owned or controlled, directly or indirectly, by one or
more residents of the other territory, shall not be subjected
in the first-mentioned territory to any taxation or any
requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to
which other similar enterprises of that first-mentioned
territory are or may be subjected.
6. In this Article the term "taxation" means taxes which are the
subject of this Agreement.

ARTICLE 20 MUTUAL AGREEMENT PROCEDURE
1. Where a resident of a territory considers that the actions of
one or both of the competent authorities result or will
result for him in taxation not in accordance with this
Agreement, he may, notwithstanding the remedies provided by
the national laws of those territories, present his case to
the competent authority of the territory of which he is a
resident. The case must be presented within three years from
the first notification of the action resulting in taxation
not in accordance with the provisions of this Agreement.
2. The competent authority shall endeavour, if the objection
appears to it to be justified and if it is not itself able to
arrive at an appropriate solution, to resolve the case by
mutual agreement with the competent authority of the other
territory, with a view to the avoidance of taxation not in
accordance with the Agreement.
3. The competent authorities of the territories shall endeavour
to resolve by mutual agreement any difficulties or doubts
arising as to the interpretation or application of this
Agreement. They may also consult together for the
elimination of double taxation in cases not provided for in
this Agreement.
4. The competent authorities of the territories may communicate
with each other directly for the purpose of reaching an
agreement in the sense of the preceding paragraphs.

ARTICLE 21 EXCHANGE OF INFORMATION
1. The competent authorities of the territories shall exchange
such information as is necessary for carrying out the
provisions of this Agreement and of the domestic laws of the
territories concerning taxes covered by this Agreement
insofar as the taxation thereunder is in accordance with this
Agreement. Any information so exchanged shall be treated as
secret and shall not be disclosed to any persons or
authorities other than those concerned with the assessment or
collection of the taxes which are the subject of this
Agreement.
2. In no case shall the provisions of paragraph 1 be construed
so as to impose on one of the competent authorities the
obligation:
(a) to carry out administrative measures at variance with the
laws or the administrative practice of that or of the other
territory;
(b) to supply particulars which are not obtainable under the
laws or in the normal course of the administration of that
or of the other territory;
(c) to supply information which would disclose any trade,
business, industrial, commercial or professional secret or
trade process, or information, the disclosure of which
would be contrary to public policy.

ARTICLE 22 ENTRY INTO FORCE
1. This Agreement shall be approved by the competent authorities
in accordance with their respective legal procedures, and
shall enter into force on the date of the Exchange of Letters.
2. The Agreement shall be effective for income accrued or
derived on or after the date as indicated in the Exchange of
Letters.

ARTICLE 23 TERMINATION
This Agreement shall remain in force indefinitely but either of
the competent authorities may terminate the Agreement by giving
to the other competent authority written notice of termination
on or before the 30th day of June in any calendar year not
earlier than the year 1986. In such event, the Agreement shall
cease to be effective for income accrued or derived on or after
1st January of the calendar year following the year in which the
notice of termination is given.

Initialed at Taipei this 30th day of December, 1981.

(Signed) (Signed)
HSUEH CHIA-CHUEN HSU TSE-KWANG
Director-General Commissioner of Inland Revenue
Department of Taxation
Republic of China Republic of Singapore