(a) The main objective of double taxation agreement (DTA), as contained in the preamble to the agreements is the elimination of double taxation, without creating an opportunity for non-taxation or reduced taxation. Thus, a tax treaty does not primarily create exemption from taxation in the Source State.

While the Resident State has an unlimited right to tax its residents, the Source State is allowed some taxing rights under the treaty in many instances, and on those occasions, it will have the prior right to tax, whereas the Resident State must eliminate double taxation in those instances.

Double taxation agreement (DTA) does not exempt a company from payment of tax on income or profit derived from a Source country but gives the company opportunity to claim a credit (double taxation relief) in its home country in respect of double taxation suffered on its operation in another tax jurisdiction.

In Nigeria, the provision where there is double taxation agreement is only applicable to a resident taxpayer.

I disagree with the company because Singapura PTC Limited is a non-resident company that derives incomes from Nigeria.

The company shall be liable to tax on incomes which are deemed to be derived from Nigeria, while the DTA between Nigeria and Singapore shall only be applicable to resident companies in Nigeria.

(b) A resident of Nigerian treaty partner may enjoy any of the following benefits, depending on the provisions of the DTA:

(i) Relief from double taxation (elimination of double taxation).

(ii) Reduced tax rates on income derived by airlines or shipping companies or exemption of their income from tax in Nigeria.

(iii) Reduced withholding tax rates on passive income or fees for technical service.

(iv) Requirement for permanent establishment (PE) before taxation in Nigeria.

(v) Access to mutual agreement procedure (MAP) for dispute resolution; and

(vi) Non-discrimination in taxation matters.

(c) A company registered in Singapore may be liable to tax in Nigeria under the DTA between Nigeria and Singapore where the company:

(i) Is also a resident of Nigeria (dual resident of both countries) and determined to be resident of Nigeria under the tie-breaker rule in Article 4(3) of the Agreement.

(ii) Derives business profit which is attributable to a permanent establishment it has in Nigeria.

(iii) Derives a passive income from Nigeria (dividend, interest, royalties).

(iv) Has an immovable property in Nigeria from which an income is derived

(v) Derives capital gains from Nigeria.

(vi) Carries on the business of international traffic (shipping or airline transportation) and derived income from Nigeria from that activity; and

(vii) Receives a payment or income in respect of a performance exercised in Nigeria by an entertainer or sportsperson.