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Payments made pursuant to interest rate swap agreements entered into for hedging purposes were not subject to income tax as being a payment in connection with any loan or indebtedness
An interesting decision was given by the Singapore High Court in ACC v Comptroller of Income Tax 2010 SGHC 316 recently dealing with the question whether payments made under an interest rate swap agreement could constitute interest and thus be subject to withholding tax in terms of the relevant Treaty
In ACC v Comptroller of Income Tax 2010 SGHC 316, the Singapore High Court held that payments made by one counterparty to the other under interest rate swap agreements did not constitute "any other payment made in connection with a loan or indebtedness" within the meaning of section 12(a)(i) of the Income Tax Act and that, accordingly, such payments are not deemed to be derived from Singapore with the consequence that the requirement to withhold tax under the Income Tax Act did not apply to such payments
