Monday, July 13, 2009

S'pore aligning tax code with OECD's

This was published on Asiaone's website [link] on 2 Jul 2009.
S'pore aligning tax code with OECD's

DRAFT amendments have been made to the local tax regime to align Singapore with the Organisation for Economic Cooperation and Development's standard for the effective exchange of information on tax matters.

One proposed change will lift the domestic interest requirement for information exchanged under Double Taxation Agreements (DTA) that incorporate the OECD standard.

'The amendments will enable the Inland Revenue Authority of Singapore (IRAS) to assist on requests from our DTA partners for information where Singapore does not have a domestic tax stake or interest in the request at hand,' said Lim Hwee Hua, Second Minister for Finance and Transport.

Also, IRAS will be given greater power and scope to request information held by banks and trust companies, as well as exchange information on taxes other than income tax, when presented with genuine requests.

The standard, however, allows the requested jurisdiction to reject requests that are frivolous or spurious in nature - otherwise known as 'fishing expeditions'.

'Banks cannot serve to harbour financial criminals, but they are equally held accountable to their clients in ensuring that confidentiality cannot be lifted without justification,' said Mrs Lim.

Other financial centres such as Hong Kong, Switzerland and Luxembourg have announced similar plans to implement the OECD standard.

The draft legislative amendments to the income tax law have been aired for public consultation until July 28.

This article was first published in The Business Times.

I'm surprised that no one has realized the significance of this move to revise our tax laws. Here's a clue [link]. Then think about Indonesia and our banking industry [link].

Obama has essentially made Singapore do what the Indonesians had asked for years. Intentionally or unintentionally, 'Barry' Obama has done a favour for his step-father's homeland. Maybe it is time for Singapore to act like an honest citizen of the world like the rest of the world.


Anonymous said...

This is a classic case of pointing one finger only to have 3 fingers pointing back at you.

An recent article in the Financial Times ("A lid to be lifted") points out that the problem with financial opacity is mostly with large financial centres. A case in point would be a survey conducted by Jason Sharman of Griffin University whose research found ironically that it was the US banks that were more willing to open anonymous bank accounts with proper identification.

In the case of Singapore, it's supply and demand. The tax regime merely seeks to be competitive. If mere promises of coorperation gets them there. Well and good.

Fox said...

I think you are mistaken.

Singapore does not automatically exchange tax information with any other country.

An American can open a bank account in Singapore and not declare it the tax authorities in America although he is legally obliged to. He needs only to declare his bank account earnings to the Singapore tax authorities. The tax authorities in the US get that information from the tax authorities in Singapore.

The same goes for Singapore and Indonesia. Why else do you think many rich Indonesians have set up their tax residences in Singapore?