Singapore will automatically share tax information with certain foreign authorities, under a new law passed in Parliament yesterday.
Its move is part of a global crackdown on tax evasion that already includes more than 90 jurisdictions, including major financial centres such as Dubai, Hong Kong, Luxembourg and Switzerland.
The exchange will take effect by 2018, said Senior Minister of State for Finance and Law Indranee Rajah during the Second Reading of the Income Tax (Amendment) Bill.
The change will allow Singapore to implement what is known as the Common Reporting Standard (CRS), a global standard that underpins the automatic exchange of financial account information between tax authorities.
Under the CRS, tax authorities agree to share tax information on residents' assets and incomes automatically. Until now, most tax information has been shared only on request. The move will improve Singapore's international tax compliance, said Ms Indranee.
Financial institutions in Singapore will have to put in place necessary systems to collect the relevant CRS data from Jan 1 next year, and the exchange will start in 2018.
Singapore will also sign agreements with other jurisdictions to automatically exchange tax information, said Ms Indranee.
During the debate on the Bill, Ms Foo Mee Har (West Coast GRC) said financial institutions must get ready for "a new age of unprecedented transparency... as governments work hard to get what is due their peoples".
Quotatation Statement Here.]The change will allow Singapore to implement what is known as the Common Reporting Standard (CRS), a global standard that underpins the automatic exchange of financial account information between tax authorities.
Under the CRS, tax authorities agree to share tax information on residents' assets and incomes automatically. Until now, most tax information has been shared only on request.
The CRS, however, could have an impact on Singapore's competitiveness as an international financial centre, especially if other jurisdictions do not adopt the standards at a similar pace, said Ms Foo, who is the chief executive of the Wealth Management Institute.
She also raised concerns about sharing tax information with foreign tax authorities. "Not every country is as ready as we are to deal with transparency, and we have a duty to the clients we serve to safeguard their privacy against abuse.
"Tax information can be misused for a variety of nefarious ends, including criminal enterprise, political corruption and social chaos," she added.
Responding, Ms Indranee said Singapore will enter into automatic exchange of information arrangements only with jurisdictions with a strong rule of law and ability to ensure confidentiality of the information exchanged.
Separately, the Bill also gave effect to changes to the Productivity and Innovation Credit (PIC) scheme announced in Budget 2016.
The PIC cash payout rate will be lowered from 60 per cent to 40 per cent for qualifying expenditure incurred on or after Aug 1 this year. Electronic filing of PIC cash payout applications will also be made mandatory from the same date.
Mr Louis Ng (Nee Soon GRC) expressed concern that as the PIC scheme is gradually phased out, "more and more people will try to cash in" by making false or inaccurate claims. He called for the taxman to investigate and audit more claims, and "take a stronger stand when it comes to PIC consultants" who provide advice to businesses on PIC matters for a fee.
"We need to make changes to ensure that consultants are no longer able to cheat the companies and also the Government," said Mr Ng.
Ms Indranee said the Inland Revenue Authority of Singapore will continue to take a strong stand against abuse of the PIC scheme and make use of analytics and risk-profiling in its enforcement efforts.