Summary Of Responses - Public Consultation on Draft Income Tax (Amendment) (Exchange Of Information) Bill 2009

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A public consultation exercise on the draft Income Tax (Amendment) (Exchange of Information) Bill 2009 was held from 29 June 2009 to 28 July 2009.

2. The draft Bill comprised amendments to the Income Tax Act to allow Singapore to enter into Avoidance of Double Taxation Agreements (DTAs) that incorporate the new internationally agreed Standard for the exchange of information for tax purposes.


3. A total of 74 comments on the draft Income Tax (Amendment) (Exchange of Information) Bill 2009 were received from the public. MOF has considered all comments carefully, and accepted 56 of these comments for incorporation or revision to the draft Bill. The remaining comments were not accepted for implementation as they are inconsistent with either the drafting convention for legislation or the policy objectives of the changes.

4. A summary of the key comments received and MOF’s responses to them are as follows:

Type of information that may be requested

(a) Definition of “tax position”

Comment: Respondents sought clarification on how the future liabilities of a taxpayer would be relevant to the definition of the taxpayer’s “tax position”.

MOF’s response: Future liabilities are relevant to the definition of “tax position” because a taxpayer’s tax liability generally arises after an assessment has been raised on his income. The competent authority may require relevant information before he can raise such an assessment. These requests for information would have to be specific, relevant and justified, and fishing expeditions would be rejected.

(b) Time limit for information requested

Comment: An information request may relate to a person’s tax position at any time or in relation to any period, unless otherwise stated in the prescribed arrangement in question. Respondents expressed concern that this may not be reasonable as authorities and taxpayers are not required to keep information beyond statutory limits, and asked that MOF clarify the scope of information, in terms of age, which can be requested for.

MOF’s response: The statutory record-keeping requirements applicable to individual taxpayers and third parties as stipulated under Section 67 of the Income Tax Act as well as other statutes remain unchanged. Taxpayers and third parties will not be penalised if they are unable to submit information that they no longer have on record outside of the statutory record-keeping requirement period.

Role of the Attorney General

Need for two-step process involving the Attorney General (AG) and the High Court

Comment: Respondents sought clarifications on the roles played by the AG and High Court in the information gathering process, and suggested that the two-step process involving the AG and the High Court be simplified so as to expedite the information exchange process.

MOF’s response: The High Court plays the role of an independent third party which makes an assessment to determine whether a request is justified. This is conceptually similar to the tribunal process used in the United Kingdom, or the court process in the United States.

The dual involvement of the AG and the High Court is an existing and common feature in our legal system. For example, the Prevention of Corruption Act and the Immigration Act also requires AG’s sanction or consent before the agency in question can prosecute and enter court proceedings.

In view of the feedback received, MOF has decided to streamline the process. The Bill has been re-drafted to remove the need for IRAS to seek AG’s consent before applying for a Court order.

Court order and taxpayer notification

(a) Notification of affected parties

Comment: The taxpayer and bank or trust company from whom information protected under the Banking Act and Trust Companies Act is sought should be informed of the purpose of the request and the identity of the competent authority on whose behalf the information is being requested.

MOF’s response: Accepted partially for implementation. The internationally agreed Standard recognises that the notification of affected parties can be an important aspect of the rights provided under domestic law. Under the revised Bill, the Comptroller, upon receipt of a request for protected information under a prescribed DTA which contains the new internationally agreed Standard, will notify the affected taxpayer as well as the bank or trust company that is believed to be in possession of the information of the request. Such notification is withheld only in exceptional circumstances, such as if IRAS deems that doing so will prevent or unduly delay the effective exchange of information, or is likely to prejudice any investigation into any breach of laws relating to tax. In such circumstances, IRAS in its application to High Court would also specify that the Court order is to be kept confidential from the affected taxpayer.

(b) Right of appeal for affected parties

Comment: The Comptroller is required to apply to the High Court for an order to require the bank or trust company to release protected information to enable IRAS to exchange information, upon receipt of a valid request made under a prescribed DTA. In addition to allowing the entity on which the Court order is served to make an application to vary or discharge the order, the affected taxpayer should also be given the right to make representations to the High Court, and to appeal on the outcome of the High Court’s decision. Giving the taxpayer the right of appeal would help to ensure that legitimate businesses and individuals would not be subject to unnecessary and unjustified investigations.

MOF’s response: Accepted for implementation. The Bill has been re-drafted to provide that the taxpayer may also apply to the High Court to discharge or vary the Court order.

(c) Period of compliance

Comment: Respondents commented that the default period of 7 days to release the information is too short and may impose undue difficulty upon banks or other affected parties. In this regard, respondents asked that the default time period for compliance with an order be extended.

MOF’s response: Accepted for implementation with modification. The time period for compliance will be stipulated as 21 days, or such other period as the High Court considers appropriate.

5. MOF would like to thank all respondents for their comments.

Public Consultation