Singapore government unveils 4 steps to fight cross-border tax offences

A follow up from 2009 amendments.

According to a release, Singapore is significantly strengthening its framework for international cooperation to combat cross-border tax offences.

This follows a comprehensive review of the current Exchange of Information (EOI) framework, and represents a further, major step to enhance cooperation following the changes made in 2009. Singapore had then endorsed the internationally agreed Standard for EOI for tax purposes.

Since then, the Singapore government had amended laws to implement the Standard and started renegotiating tax agreements to incorporate the Standard. The Global Forum on Transparency and Exchange of Information for Tax Purposes has recently affirmed that Singapore’s practice of EOI has been in line with the Standard.

Singapore will take four key steps that will further strengthen its EOI framework:

1) Extend EOI assistance in accordance with the Standard to all existing tax agreement partners, without having to update individually our bilateral tax agreements with them. The current approach of updating individual agreements is no longer necessary, as most countries have adopted the Standard and have similar EOI requirements. This extension of EOI assistance will be subject to reciprocity.

2) Sign the Convention on Mutual Administrative Assistance in Tax Matters. This was first developed as an OECD-Council of Europe agreement, and has recently been promoted as an international agreement for bilateral tax cooperation among the Convention’s signatories.

There are currently 45 signatories to the Convention. Based on these current signatories, the Convention will expand Singapore’s network of EOI partners by 11 jurisdictions, including Brazil and the United States.

Taken together, the above two changes will more than double the number of jurisdictions - from 41 to 83 - that Singapore will be able to exchange information with under the Standard.

3) Allow IRAS to obtain bank and trust information from financial institutions without having to seek a Court Order. While Singapore has been able to respond promptly to most requests for information from its foreign partners, removing the requirement for a Court Order will further streamline the administration of EOI under the Standard.

It will not undermine the basic safeguards to taxpayers. IRAS will continue to assess whether the requests are in line with the Standard, and taxpayers will continue to have the right of appeal.

4) Conclude with the United States an Inter-Governmental Agreement (IGA) that will facilitate financial institutions in Singapore to comply with the Foreign Account Tax Compliance Act (FATCA). FATCA is a US law which requires all financial institutions outside of the US to pass information about financial accounts held by US persons to the US Inland Revenue Service (US IRS) on a regular basis.

The IGA will be in the form of Model 1, under which information is exchanged between Singapore and US agencies. The Model 1 IGA will help ease the compliance burden of financial institutions in Singapore with FATCA.