In a bid to combat cross-border tax offences and maintain its name as a reputable financial center, Singapore has updated its Income Tax Act. The changes therein will trump the confidentiality provisions in the Banking Act, which has been highlighted for making the city-state the world’s fourth largest offshore financial center. Singapore company formation specialist Rikvin recognizes this as a step in the right direction.
A major change in the Income Tax Act would see the Inland Revenue Authority of Singapore (IRAS) able to directly obtain bank and trust information from financial institutions without seeking an Order from the High Court.
In the same vein, Singapore will sign the Convention on Mutual Administrative Assistance in Tax Matters, which was first developed as an OECD-Council of Europe agreement. The Convention has 45 signatories and will expand Singapore’s EOI network by 11 jurisdictions.
To enhance international tax cooperation, Singapore will have exchange of information (EOI) agreements with its existing tax agreement partners. Hence, its network of EOI partners will be increased to 83 jurisdictions, up from 41 jurisdictions by January 2014.
Although these measures may seem to encroach the privacy of account holders and may not sit comfortably even with law-abiding persons, the new focus on transparency is necessary.
It will not only give impetus to anti-money laundering efforts globally, but ensure that Singapore will not be used to harbor illicit funds or siphon undeclared assets.
In addition, Singapore will also conclude an intergovernmental agreement with the United States. The agreement will ensure that financial institutions in Singapore will provide automatic information sharing and comply with the Foreign Account Tax Compliance Act (FATCA), which will come into effect January 2014. Non-compliance would mean no access to US financial markets.
Commenting on the measures, Mr. Satish Bakhda, Head of Operations at Rikvin said, “Although these measures may seem to encroach the privacy of account holders and may not sit comfortably even with law-abiding persons, the new focus on transparency is necessary. It will not only give impetus to anti-money laundering efforts globally, but ensure that Singapore will not be used to harbor illicit funds or siphon undeclared assets.”
“These measures in turn indicate that Singapore is serious about maintaining its reputation as a vibrant financial and wealth management center. It also wants to send the message that Singapore is safe and wishes to maintain high standards of financial integrity to safeguard legitimate funds. We anticipate more genuine firms will be encouraged to setup a company in Singapore,” affirmed Mr. Bakhda.