SINGAPORE, Sept. 17 (Xinhua) -- The revised agreement to avoid double taxation between Singapore and China will enter into force on Tuesday after ratification by both countries, Singapore's Finance Ministry announced on Monday.

The revised treaty was signed on July 11 by Chinese Vice Premier Wu Yi when she visited here and Singapore's Commissioner of Inland Revenue Moses Lee. Now the ratification process for the treaty has been completed.

With the ratification, the provisions of the treaty shall have effect on income derived on or after January next year.

The revised treaty will replace the original one that has been in force since Dec. 12, 1986 and subsequently amended by an Exchange of Notes effective as of July 1, 1991.

Under the revised agreement, withholding tax rate on dividends will be reduced from 7 percent (for corporate shareholders holding at least 25 percent of the share capital) and 12 percent (for other shareholders), to 5 percent and 10 percent respectively.

The withholding tax rate on lease payments for industrial, commercial or scientific equipment will be reduced from 10 percent to 6 percent.

In addition, gains from the sales of shares in Chinese companies will be subject to tax in China only if the person making the sale has held at least 25 percent of the share capital of the company in the past 12 months.

"It will further strengthen the economic links between the two countries by facilitating the cross-flow of trade, investment, financial activities and technical know-how and expertise between Singapore and China," said the ministry.

Singapore has in force avoidance of double taxation agreements with more than 60 countries to date.