Global Daily Tax News, Singapore, Bhutan Sign New Double Tax Pact, (May 13, 2026)

Singapore and Bhutan signed a new double tax avoidance agreement on May 12, 2026.

The DTA provides that withholding taxes at source will be capped at zero percent for dividends received by companies, and at five percent for dividends income in all other cases.

The withholding tax rate for interest and royalties will generally be capped at five percent.

Meanwhile, the agreements provide that a construction permanent establishment (PE) will be created after six months, or 12 months for activities in Gelephu Mindfulness City, and a services PE will be created if services are rendered during a period of 120 days in any 12-month period.

The agreement includes provisions intended to counter tax base erosion and profit shifting. The new agreement includes a preamble that states that the DTA is not intended to create opportunities for non-taxation or reduced taxation through tax evasion or avoidance, or treaty shopping.

Further, the agreement includes provisions to counter treaty abuse, prevent the artificial avoidance of permanent establishment status, neutralize the effects of hybrid mismatch arrangements, and improve dispute resolution mechanisms.