Singapore to Crack Down on Cross-Border Tax Cheats
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Keen to avoid the kind of onslaught on tax cheats being waged in EU and U.S., Singapore, the world’s fourth largest offshore financial centre, said on Tuesday it will sign up to the Organisation for Economic Cooperation and Development’s multilateral treaty on sharing tax details, a move that would make it harder for cross-border tax cheats to operate.
Keen to avoid the kind of onslaught on tax cheats being waged in EU and U.S., Singapore, the world’s fourth largest offshore financial centre, said on Tuesday it will sign up to the Organisation for Economic Cooperation and Development’s multilateral treaty on sharing tax details, a move that would make it harder for cross-border tax cheats to operate.
The move comes as the city-state, which is growing rapidly as a wealth management centre, is determined to clampdown on illicit funds and money laundering as it attracts money from wealthy entrepreneurs in the fast-growing South East Asian market.
According to the latest central bank data, assets managed by fund managers in Singapore stood at $1.05 trillion in 2011, with over 70 percent coming from overseas, making it one of the world’s largest offshore financial centres.
Singapore has already faced accusations from European politicians that, as the veil of secrecy over Switzerland is lifted, wealthy tax evaders are shifting their money to South East Asia.
Related: Oldest Swiss Bank to Shut After Guilty Plea in US Tax Probe
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Local authorities, however, claim the island’s secrecy rules are aimed at safeguarding investors’ legitimate interest in privacy and did not mean it was a haven for illicit funds.
On Tuesday, Singapore said it will adopt the OECD standards on information sharing in all of its existing bilateral tax agreements that do not already contain them, as long as the city-state gets reciprocity.
Once the OECD-related measures are in place, Singapore will meet the international standards on tax information sharing with up to 84 different jurisdictions, up from the current 41.
“There no conflict between high standards of financial integrity and keeping our strengths as a financial centre for managing wealth,” Finance Minister Tharman Shanmugaratnam said in a statement. “Singapore will continue to be a vibrant wealth management centre, with laws and rules that safeguard legitimate funds and reject tainted money.”
The ministry added it would take four steps to “significantly strengthen” its rules for combating tax offences, which were likely to be in place by next year.
It would conclude a so-called “inter-governmental agreement” with the U.S. that will enable financial institutions to comply with a U.S. law requiring them to share information on Americans’ overseas accounts.
The tighter rules are intended to fall in line with new global standards announced last year that treat tax crimes as a money-laundering offence.
Before July 1, all financial institutions in Singapore must identify accounts they strongly suspect hold proceeds of fraudulent or wilful tax evasion and, where necessary, close them. After that, handling the proceeds of tax crimes will be a criminal offence under changes to the city-state’s anti-money laundering law.
Singapore also aims to amend its laws so that the tax authority will no longer need a court order to get information from banks on accounts of suspected tax dodgers at the request of a foreign government.
Related: EU Steps Up Efforts To Tackle $1 Trillion In Annual Tax Evasion
Related: Singapore Home To World’s Top-Earning Expats: Study
