In the case of Malaysia, the income tax and mineral oil tax provisions apply. In the case of Singapore, income tax applies. If the person who is not an individual is established in the two contracting states, the residence is determined by the state in which his or her actual place of administration is located. If in doubt, the competent authorities of the contracting states agree on the place of residence, taking into account all relevant factors. This provision does not apply where the beneficiary has an MOU in the contracting state where the company`s dividend is set and the dividend received is effectively linked to that MOU. These PE-related dividends are considered a commercial benefit and subject to tax treatment accordingly. A company of one State Party that derives income from the other State party is not taxed by the other state on un distributed profits, even if the untributed profits are made up, in whole or in part, of income or profits obtained in that other state. The other state must not collect tax on dividends that the corporation distributes to persons who do not reside in that other state. Due to its one-step tax system, Singapore does not impose tax on dividends that are in the hands of the beneficiary. Malaysia is also subject to one-stage taxation, so dividends are tax-exempt in the hands of beneficiaries. The control activities of a firm in a contracting state, carried out in another state for more than six months in connection with a construction or construction, installation or assembly project, carried out in that other state, constitute an MOU.
Profits of a business in a contracting state are taxable only in that state, unless the company operates in the other contracting state through a business management activity located there. But only the portion of the profit actually attributable to the MOU can be taxed in the other contracting state. In determining the benefits of the MOU, all expenses and deductions that would reasonably be attributable to the MOU and deductible are admitted if the MOU was an independent business and if the EP`s profits are determined to be a separate and distinct business that carries out the same or similar activities under identical or similar conditions and is totally independent of the business. Of which he is the pe. The mere purchase of goods or goods by an MOU for the company does not have the effect of attributing profits to this MOU.