SINGAPORE - All financial institutions here are now required to establish the tax residency status of all their account holders under new rules to fight tax evasion.
From Jan 1 this year, Singapore began complying with the Common Reporting Standard (CRS), an internationally agreed standard which would allow countries to automatically exchange financial data for tax purposes. It aims to enhance tax transparency to detect and deter tax evasion through the use of offshore bank accounts.
The new rule covers depository institutions such as banks, specified insurance companies, investment entities and custodial institutions, the Inland Revenue Authority of Singapore (Iras) announced on Friday (Jan 6).
They must also report to Iras the financial account information of account holders who are tax residents of jurisdictions with which Singapore has a Competent Authority Agreement (CAA) to exchange the information.
To-date, Singapore has signed CAAs with Australia, United Kingdom, Japan, Republic of Korea, South Africa, Norway, Italy, Canada, Finland, the Netherlands, Iceland, Malta, Ireland, Latvia and New Zealand.
Iras said the information provided by Singapore will only be disclosed and used for tax purposes such as the assessment, collection, recovery, enforcement, prosecution, determination of appeals for tax purposes, and the oversight of these functions. They will not be used for other purposes unless such disclosure is also permitted in Singapore and with approval from Singapore.
Iras cautioned account holders that deliberately providing false information to financial institutions on one's tax residency status is an offence under the CRS law.
All account holders, when requested by their respective financial institutions, should provide information and supporting documents when asked to establish their tax residency status.
If the they do not respond to requests to confirm their tax residency status, the financial institutions will have to treat the account holders as tax residents in the respective foreign jurisdictions, based on the information available to them.
Account holders should also inform their financial institutions of any change in circumstances, such as long-term job postings to a foreign jurisdiction, which may affect their tax residency status.