This agreement was signed in 2002 and came into force three years ago. The ASEAN-China Free Trade Area is the largest free trade area in the world in terms of population and, after the European Union and NAFTA, the third largest in terms of nominal GDP. The initial free trade agreement reduced tariffs to nearly 8,000 product categories, or 90% of imported goods at zero. These favourable conditions came into force in China and in ASEAN members, including Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Cambodia, Laos, Myanmar and Vietnam will also apply these conditions in 2015. Singapore, with its wealth of financial and other services, also has a free trade agreement with China. This contract, signed in 2009, focuses on the services sector, in addition to individual income tax benefits. Singapore intends to increase its population by an additional 2 million people and many of them are expected to be prosperous Chinese nationals on the continent. Among the benefits to businesses is the reduction in withholding tax for a large number of services, including royalties. This is one of the reasons why Singapore is becoming a regional investment centre in China and Asia and is receiving more and more Chinese foreign investment going in the opposite direction, to Singapore and to reinvest throughout Asia.
Since foreign investors are automatically considered Singaporean companies when setting up a subsidiary, they can also access Singapore`s impressive range of international tax treaties – including many other free trade agreements and more than 80 bilateral double taxation agreements. An Introduction to Tax Treaties Across Asia In this issue of Asia Briefing Magazine, we examine the different types of trade and tax agreements that exist between Asian nations. These include bilateral investment agreements, bilateral double taxation agreements and free trade agreements that cover all companies directly active in Asia. Some media have called the RCEP a Chinese-led effort, but analysts say it`s inaccurate.