Singapore joins effort against tax evasion - The Business Times

THE global clampdown on cross-border tax evasion has moved up a notch, with key financial centres in Europe pressed of late to lift the veil on banking secrecy and Singapore’s announcement this week of new curbs to combat the tax offences.

Austria – the last country holding out on the European Union’s proposed rules on bank information sharing – is now said to be leaning towards compliance, after Luxembourg – its longtime ally – caved in recently and pledged to join the automatic data exchange from 2015. Automatic exchange of information on taxpayers and depositors would better allow tax authorities to spot tax evasion or illicit money flows – and with government coffers in the red across the continent, EU finance ministers would want to claw back every cent that is properly theirs. The EU wants now to bring the region’s money havens in line too, and is pushing for Switzerland, Liechtenstein, San Marino, Andorra and Monaco to – in the name of fighting fraud – surrender bank data and ditch their enshrined secrecy. The Swiss government has – so far – given a guarded response.

Singapore, with healthy surpluses, shares similar concerns about the need for greater transparency in the financial sector, particularly to ensure that what is parked at or flows through the banks here are not undeclared assets or ill-gotten funds. It has come up with a no-holds-barred four-pronged approach to combat financial fraud. First, it will extend information exchange on tax details under a global standard to all existing tax agreement partners without having to renegotiate the tax pacts. Singapore will also sign up to an international multilateral treaty on cooperation in tax matters. With these two measures, the number of countries with which Singapore can exchange information will more than double to 83, from 41. Another significant move will see the taxman no longer having to seek a court order to obtain bank and trust information when requested by other countries. As well, Singapore will sign a deal with the United States to enable financial institutions here to comply with a new US law, the Foreign Account Tax Compliance Act (FATCA).

The new measures have been hailed by the Organisation of Economic Cooperation and Development as “very significant”, and roundly lauded by industry players. While strict banking confidentiality laws may earlier have helped build up Singapore’s credentials as a wealth management centre, and indeed may have been a bastion of many a tax haven elsewhere, today’s new normal global finance, with vast flows of cross-border funds, demands greater, not less, openness in well-regulated regimes. Far from deterring investors, the new measures will add to Singapore’s reputation as a clean and efficient financial centre with the highest standards of integrity. And for FATCA-bound banks, a Singapore-US government deal will lower compliance costs as well.

Singapore joins effort against tax evasion - The Business Times