Singapore Inks Agreements On Tax-Information Exchange22 Jun 2017
By MICHELLE QUAH email@example.com
SINGAPORE inked two agreements in the Netherlands on Wednesday, signifying that it has moved a step further in its commitment to automatically exchange tax information with other jurisdictions, under global efforts to address issues such as tax evasion and tax avoidance.
The two agreements, known as Multilateral Competent Authority Agreements (MCAAs), will facilitate the Automatic Exchange of Information (AEOI), which Singapore has agreed to implement next year under the internationally agreed framework known as the common reporting standard (CRS).
The MCAAs cover:
• AEOI under the CRS; and
• the Exchange of Country-by-Country (CbC) Reports.
The Ministry of Finance (MOF), which made the announcement, said these agreements reaffirm Singapore's commitment to international standards on tax cooperation.
The Organisation for Economic Cooperation and Development (OECD) and the Global Forum for Transparency and Exchange of Information for Tax Purposes have mounted global efforts to bring about transparency and exchange of information for tax purposes, in order to address risks to tax compliance, such as tax evasion.
With AEOI under the CRS, the taxman will be able to get information, through financial institutions, of account holders who are tax residents of jurisdictions with which Singapore has agreed to exchange tax information.
CbC reports, on the other hand, are aimed at enhancing transparency for tax administrations by giving them the information they need to assess risks related to transfer pricing and other forms of Base Erosion and Profit Shifting (BEPS), wherein profits are artificially moved to low or no-tax locations to avoid tax.
Finance Minister Heng Swee Keat said of the signings: "As a business and financial hub, Singapore has earned a high level of trust and confidence. We take our commitment to international standards on tax cooperation seriously. Signing both MCAAs will enable Singapore to implement the international standards with our bilateral AEOI partners in an effective and efficient way."
The MCAAs have gained recognition as multilateral framework agreements for bilateral cooperation on AEOI. They enable a signatory to the agreements to enter into AEOI bilaterally with another signatory on a mutual-consent basis.
With the signing of the MCAAs, MOF said, Singapore will continue to abide by the principles for establishing bilateral AEOI relationships for both CRS and CbC; this means the AEOI partner must have the safeguards needed to ensure the confidentiality of information exchanged and prevent its unauthorised use, and that there is full reciprocity with the AEOI partner in terms of information exchanged.
In the case of the CRS, the MOF said, Singapore will also want to ensure a level playing field among all major financial centres. It added that Singapore will consider engaging in automatic exchange of financial account information with regional jurisdictions which have the safeguards to ensure the confidentiality of information exchanged, and have similar agreements in place with relevant financial centres, including Hong Kong and Switzerland.
In the case of CbC, signing the MCAA will enable Singapore to efficiently establish a wide network of exchange relationships for the automatic exchange of CbC Reports, it said.
The Monetary Authority of Singapore's (MAS) assistant managing director for Development and International Leong Sing Chiong said: "MAS welcomes the greater tax transparency and cooperation the CRS represents. Financial institutions in Singapore have been putting in place the systems necessary to implement the CRS in 2018. This higher standard will provide a sound environment for sustained growth of the private banking industry and enable Singapore to remain a clean and trusted financial centre."
Both agreements were signed by Singapore's deputy commissioner for International, Investigation and Indirect Taxes Group of the Inland Revenue Authority of Singapore (Iras), Chia-Tern Huey Min.Source: The Business Times © Singapore Press Holdings Limited. Permission required for reproduction.