SINGAPORE AMENDING TAX LAW TO IMPROVE INFO SHARING

UNCLAS SINGAPORE 000623 TREASURY FOR TRAND, MNUGENT SENSITIVE SIPDIS E.O. 12958: N/A TAGS: EFIN EINV ECON SN SUBJECT: SINGAPORE AMENDING TAX LAW TO IMPROVE INFO SHARING REF: A) SINGAPORE 294; B) SINGAPORE 381 ¶1. (SBU) Summary: Singapore's Ministry of Finance has issued for comment draft amendments to its Income Tax Act to improve exchange of information on tax matters and bring Singapore in line with OECD standards. The OECD's inclusion of Singapore on its "grey list" of non-compliant jurisdictions in April sparked concerns Singapore would be branded a tax haven and damage its image as a financial center. The new amendments would improve sharing of tax information with foreign jurisdictions with which Singapore has a Double Taxation Agreement, including cases where Singapore does not have a domestic tax interest. The public comment period ends July 29. End Summary. ¶2. (SBU) On June 29, Singapore's Ministry of Finance released for comment draft amendments to its Income Tax Act aimed at bringing Singapore's tax regime in line with the Organization for Economic Cooperation and Development's (OECD) 2008 Standard for effective exchange of tax information. Fearing inclusion on an OECD "tax haven" list would damage Singapore's reputation as a global financial center, the authorities announced in late March they would introduce draft amendments by mid-2009 to make national laws compliant with the OECD recommendations (see ref A). In early April, the OECD listed Singapore among countries that had endorsed internationally agreed tax standards, but had yet to substantially implement them. Removing the Domestic Interest Requirement -------------- ¶3. (U) The new tax amendments would expand the assistance that Singapore tax authorities can provide to foreign jurisdictions, including removing the domestic interest requirement. Under current law, Singapore's tax authority can exchange information only if it has an interest in gathering the requested information in order to enforce Singapore's own domestic tax laws. The new amendments will allow information sharing where there is no domestic interest. The amendments will also allow foreign jurisdictions to request information held by a bank or trust company regardless of whether there is a Singapore tax matter involved. Singapore will also share information on tax types other than income tax, including goods and services taxes, stamp duties and property taxes. ¶4. (U) The amendments make clear that exchange of information requests must be specific and in line with the OECD standard. Authorities will reject what it deems as frivolous information requests, or "fishing expeditions" to search for tax violations. Tax authorities are solely authorized to request tax information from banks and trusts, and solely through a court process to require banks and trusts to release information. Double Taxation Agreement -------------- ¶5. (SBU) The OECD standards require Singapore to exchange tax information only with countries with which it has a Double Taxation Agreement (DTA),an agreement that prevents taxes being levied twice on the same income. Singapore has 66 DTAs with other countries, but the new tax sharing provisions would not apply unless those DTAs are revised. Singapore may be picky on which DTAs it chooses to renegotiate (see ref A). ¶6. Singapore has expressed an interest in pursuing a comprehensive DTA with the United States. Previous discussions on a DTA foundered partly on Singapore's domestic interest requirement, which the new amendments would eliminate. However, the United States and Singapore remained divided on a limitation of benefits that would curtail "treaty shopping", or the use of bilateral treaty benefits by third-country entities. Singapore has noted the USG's concerns, but has yet to respond (ref B). ¶7. (U) The Ministry of Finance is requesting public comment on the amendments from June 29 to July 28. Details of the draft bill can be found at the following website: http://www.mof.gov.sg/consultation_current/ public_con_draft_income_tax_bill_2009.html SHIELDS