Singapore Fights International Tax Evasion
The Southeast Asian city-state, keen to avoid the kind of onslaught on tax cheats being waged against Switzerland, said it will sign up to the Organisation for Economic Cooperation and Development’s (OECD) multilateral treaty on sharing tax details.
Singapore is expected to sign the Convention on Mutual Administrative Assistance in Tax Matters some time this year.
The government also plans to change the law so the tax office, the Inland Revenue Authority of Singapore, will not need a court order to get information from banks and trust companies sought by foreign governments, a joint statement by the central bank, the finance ministry and the tax authority said.
“This is a very significant move,” the director of the OECD’s Centre for Tax Policy, Pascal Saint-Amans, told Reuters in an email.
“Their signing of the multilateral convention is also impressive and shows the move towards transparency is really global with a key player like Singapore taking that initiative.”
Singapore’s move comes as the Group of 20 leading economies (G20) is pushing for all countries to improve the way they share tax information.
Governments in Europe and in the United States have been stepping up their efforts to clamp down on tax evasion as they try to deal with rising levels of public debt.
“These changes we are now making are a major enhancement, in step with the strengthening of international standards for exchange of information,” said Tharman Shanmugaratnam, Singapore’s deputy prime minister and minister for finance.
“There is no conflict between high standards of financial integrity and keeping our strengths as a centre for managing wealth.”
FINALISING FATCA AGREEMENT
Singapore, which hosts offices of the world’s biggest banks, will adopt the OECD standards on information sharing in all of its existing bilateral tax agreements that do not already contain them, as long as it gets reciprocity.
Once the OECD-related measures are fully in place, Singapore will meet the international standards on tax information sharing with up to 83 different jurisdictions, up from the current 41. Those new countries include the United States and Brazil.
Singapore’s tax authority said in April it had provided information concerning more than 300 requests from countries with which it has tax agreements that met the OECD standards.
Around 45 countries have already signed the OECD’s multilateral convention, although Singapore’s rival wealth management centres Switzerland and Hong Kong have not.
Singapore also announced it plans to finalise an agreement with the United States on the Foreign Account Tax Compliance Act (FATCA), a rule that forces foreign banks and other financial institutions to tell the U.S. government about accounts they hold for Americans with more than $50,000 in them.
The city-state said it plans to adopt a “Model 1” type agreement so that banks can provide the details of American account holders to the Singapore tax authority, which will then pass the information to the United States.
Singapore is already bringing in stricter rules that compel financial institutions to identify accounts they strongly suspect hold the proceeds of fraudulent or wilful tax evasion and, where necessary, to close them before July 1.
After that date, handling the proceeds of tax evasion will be a criminal offence under changes to Singapore’s anti-money laundering law.