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Mr Hsu Tse-Kwang, the Commissioner of Inland Revenue who signed for Singapore, claimed that the Agreement was one of the most liberal of the ten similar agreements which China has now
concluded.
It would provide, he argued, a profitable vehicle for non Singaporeans to join Singaporeans to invest in China. Elaborating on this Mr Jin Xin, the Director General of China's general taxation bureau, explained that investors from Singapore would pay a concessionary tax rate of 7% on dividends from a China venture provided they have more than a 25% stake in it. This concession is apparently better than those offered to other countries, which range from 10-20%. Another advantage claimed for the agreement is the provision for both sides to recognise tax incentives given by the other (a feature apparently called "tax bearing").
Comment
6. The Singapore authorities will have been disappointed at the failure of the "Gateway to China" conference to attract participants from abroad, and in particular from the senior management of companies in the United States, Japan and Europe which might undertake joint ventures with Singaporean companies in China. This was partly the fault of the Singapore organisers, the Society of Accountants, in making the conference content too specialised. The Chinese side was probably also tardy in committing itself to provide suitable speakers.
7. This failure will not, however, deter the Singapore Government from pushing ahead with its strategy of marketing Singapore as an alternative to Hong Kong as the spring board to China (Brig. Gen. Lee's keynote speech see press cutting was a succinct statement of Singapore's claims). The double taxation agreement and the granting of pioneer status to enterprises which are established in Singapore to conduct counter-trade with China are
the latest measures intended to back up these claims.
Yous Ever, heike
M C Clements
Head of Chancery
cc M Forbes Smith, SEAD; Chancery Peking; Deputy Political
Adviser, Hong Kong; OT2, DTI; FED, FCO; HKD, FCO
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