Singapore, US agree to share information to combat tax evasion

Singapore has reached a tax information-sharing agreement with the United States under a new law meant to combat offshore tax dodging by Americans, a US Treasury Department spokesman said on Monday. -- ST FILE PHOTO: DESMOND WEE
Singapore has reached a tax information-sharing agreement with the United States under a new law meant to combat offshore tax dodging by Americans, a US Treasury Department spokesman said on Monday. -- ST FILE PHOTO: DESMOND WEE

Singapore and the United States have reportedly struck an agreement to share tax information with each other.

A US Treasury Department spokesman said the Foreign Account Tax Compliance Act of 2010 (Fatca) will tack effect on Jul 1, Reuters news agency reported.

The new law is meant to combat offshore tax dodging by Americans.

It will require foreign banks, investment funds and insurers to hand over information about Americans' accounts that have more than US$50,000 to the US Internal Revenue Service (IRS).

The agreement will require banks here to comply with the regulation.

Foreign firms that do not comply with the requirements face a 30 percent withholding tax on their US investment income and could effectively be frozen out of capital markets there.

Like other countries that have signed on to Fatca, the Singapore deal will allow firms here to report US account-holder information to their local tax authority, which will in turn send it along to the IRS.

Financial firms in countries that have not reached a FATCA pact must report directly to the IRS and risk violating local privacy laws.

The US Treasury Department website showed that

More than 60 inter-governmental agreements have been negotiated so far.

Other countries that have signed on to the deal in recent days include include Indonesia, Peru and Kuwait.

US regulators came up with Fatca after a scandal involving Americans hiding money in Swiss bank accounts.