Tax Treaty Guidance

The Interpretation of the Agreement between the Government of the PRC and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and the Protocol of the Agreement was promulgated by the State Administration of Taxation on 1 September 2010 ("Circular 75"). Although merely an interpretation of the PRC-Singapore tax treaty, it applies to all similar double tax treaty provisions and supersedes all previous treaty interpretations that are inconsistent with its contents.

Notably, concerning determination of a permanent establishment ("PE") of a nonresident enterprise based on a secondment arrangement for services provided in the PRC, Circular 75 formally outlines the criteria for determining a "real employer". The real employer is the entity that: