[SINGAPORE] Income tax authorities will no longer need to get a court order to obtain client information from banks and trusts in Singapore. This will not only lift the veil further on banking secrecy, but will also help crack down on tax cheats.
To safeguard its reputation as a financial centre, Singapore is significantly strengthening its framework for international cooperation to combat cross-border tax offences, the government said yesterday.
Effective from January 2014, the changes will extend exchange of information (EOI) agreements to 83 jurisdictions, from 41 currently, and remove the need to get a court order to obtain bank and trust information from financial institutions.
Singapore will also conclude an inter-governmental agreement with the United States that will provide automatic information sharing by financial institutions here to comply with the Foreign Account Tax Compliance Act (Fatca).
Fatca comes into effect globally in January 2014. Non-compliance would effectively mean no access to US financial markets.
The changes were outlined in a joint statement from the Ministry of Finance, Monetary Authority of Singapore and Inland Revenue Authority of Singapore.
The government will make the changes to the Income Tax Act effective before the end of the year.
This follows a comprehensive four-year review of the current EOI framework and represents a major step towards enhancing international tax cooperation, the statement said.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said: "There is no conflict between high standards of financial integrity and keeping our strengths as a centre for managing wealth."
"Singapore will continue to be a vibrant wealth management centre, with laws and rules that safeguard legitimate funds and reject tainted money," said Mr Tharman, who is also MAS chairman.
Singapore, the world's fourth largest offshore financial centre, sometimes gets flak for attracting global wealth because of its strict banking confidentiality laws.
But the changes to the Income Tax Act will supersede the confidentiality provisions in the Banking Act.
Currently, IRAS has broad powers to access and obtain information from anyone who holds the information, including powers to search premises and seize information and to obtain written statements from relevant persons.
EOI requests on non-financial information such as shareholders and invoices do not require court orders. Only bank and trust information requests require a court order.
Allowing IRAS to obtain bank and trust information without having to get a court order will further streamline EOI administration.
The government said that removing the requirement for a court order would not undermine the basic safeguards of taxpayers.
IRAS will continue to assess the requests and taxpayers will continue to have the right of appeal though there are occasions when the latter is not notified about the EOI.
A peer review on Singapore's EOI regime found that over the last three years the country provided 396 requests in an effective and timely manner, largely within 90 days.
Removing the court order process will shorten EOI requests by 14 days.
Of the 396 requests, 52 - mainly banks and a handful of trusts - needed court orders. Six were challenged - three unsuccessfully and the rest still in progress.
IRAS's EOI team, set up in April 2009, has five officers dedicated fully to EOI requests and can call on an additional 41 tax investigators, if necessary.
The Organisation for Economic Co-operation and Development (OECD) has welcomed Singapore's decision to strengthen its international tax cooperation framework, describing it as a "very significant move" to improve information exchange, Reuters reported yesterday.
"This is a very significant move. Not only Singapore has decided to streamline their practice to exchange information on request, but they will be exchanging information automatically with the US," said Pascal Saint-Amans, director of OECD's Centre for Tax Policy.
Bankers too applauded the move to make Singapore's legal and regulatory framework more transparent. They also said that the inter-governmental agreement with the US on automatic information sharing will lower Fatca compliance cost.
"Singapore has developed into a global wealth management centre and it is critical that the regulators and all industry players work hand in hand to safeguard its reputation as a safe and well regulated wealth management hub for wealthy individuals in Asia and beyond," said a UBS spokeswoman.
Ravi Raju, Deutsche Bank, head of asset & wealth management, Asia-Pacific, said: "These enhancements will help further ease administrative aspects, in line with international standards and expectations towards exchange of information, aimed at tackling cross-border tax offences and bringing down any regulatory arbitrage."
Deepak Sharma, Citi Private Bank chairman, added: "The moves announced today complement, from a legal and regulatory standpoint, the ongoing work of the PBIG to protect Singapore's reputation as a clean and efficient global financial centre by promoting best practices in the industry."
Mr Sharma is also the co-chair of the Private Banking Industry Group (PBIG).
Koh Ching Ching, OCBC Bank head of group corporate communications, said: "This strengthened framework reaffirms Singapore's reputation as a financial centre with the highest standards of transparency and integrity."
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