SINGAPORE - Singapore has signed two international agreements which will make it easier for the country to automatically exchange tax information with other jurisdictions.
The agreements are part of ongoing global efforts to combat tax evasion and money laundering as well as improve tax transparency.
Called multilateral competent authority agreements (MCAAs), they lay out an international framework to facilitate the automatic exchange of tax information hence avoiding the need for countries to conclude multiple bilateral agreements.
The first agreement covers the automatic exchange of financial information under the Common Reporting Standard.
This is an international standard endorsed by the Organisation for Economic Co-operation and Development (OECD), which sets out the financial information to be exchanged between jurisdictions, the types of accounts and taxpayers covered, as well as due diligence procedures which financial institutions need to follow.
The second agreement covers the exchange of country-by-country reports, a form of tax reporting by multinational enterprises.
This form of tax reporting requires Singapore-headquartered multinationals with global revenues in excess of $1.125 billion to prepare a report setting out key data for all countries in which they operate, such as revenue, pretax profits, taxes paid and employee numbers - for financial years beginning on or after Jan 1, 2017.
The move is in line with an OECD effort to end "base erosion and profit shifting" (BEPS). This takes aim at multinational firms avoiding taxes by engineering lower profits in countries where taxes are high and correspondingly reporting higher profits in low-tax jurisdictions.
Both agreements were signed on June 21 in the Netherlands by Mrs Chia-Tern Huey Min, the deputy commissioner for international, investigation and indirect taxes at the Inland Revenue Authority of Singapore (Iras).
A statement from the Finance Ministry (MOF) said the signing of both MCAAs "reaffirms Singapore's commitment to the international standards on tax cooperation".
Even after signing the agreements, Singapore - as well as other signatories - will ultimately still have control over which jurisdictions it will automatically exchange information with.
The country with which Singapore exchanges information has to have safeguards to ensure the confidentiality of the information exchanged and prevent its unauthorised use and there has to be full reciprocity with the partner in terms of information exchanged.
In the case of CRS, Singapore will also want to ensure that there is a level playing field among all major financial centres. 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.
"Signing both MCAAs will allow Singapore to implement the international standards with our bilateral automatic exchange of information partners in an effective and efficient way."
Ernst & Young Solutions financial services tax partner Desmond Teo said the agreement covering the automatic exchange of financial account information under the Common Reporting Standard "is expected to promote a conducive environment for the long-term growth of the wealth management industry, and enable Singapore to grow further as a reputable financial centre".
Mr Abhijit Ghosh, tax markets leader at PwC Singapore, said the moves show Singapore is committed to fighting international tax avoidance and evasion.
"In today's era of tax transparency and information exchange, taxpayers with global footprints should continue to align their cross border trade and business structures with reference to risks and substantive activities carried out in different countries," he added.
