SINGAPORE - The Government yesterday made public its response to feedback on proposed new regulations to help financial institutions here comply with a new United States law that is being imposed worldwide.
The US Foreign Account Tax Compliance Act (Fatca) requires all financial institutions outside the US to regularly submit information on financial accounts held by US persons to the US Internal Revenue Service.
If they fail to do so, these financial institutions face a 30 per cent withholding tax on certain gross payments received from the US.
To help financial institutions here comply with this law that took effect in July, Singapore has signed an Intergovernmental Agreement (IGA) with the US. This agreement will allow financial institutions here to report the required information to the Inland Revenue Authority of Singapore (Iras), which will in turn pass it to the US.
This will help ease the compliance burden for Singapore's financial institutions as their reporting obligations would be deemed met once they have passed the information to Iras.
A total of 567 suggestions were received from a public consultation exercise held Sept 22 through Oct 17 by the Ministry of Finance (MOF), the Monetary Authority of Singapore and Iras. They covered areas such as the information reporting obligations of trusts, the applicability of US regulations, and the exemption of Supplementary Retirement Scheme Accounts (SRS) and SRS Investment Accounts.
Some 208 suggestions that helped advance the policy objectives for implementing the Singapore-US Fatca IGA were accepted, and incorporated into the regulations and Fatca E-Tax guide.
The regulations and the e-Tax Guide set out the reporting regime and include information on various issues related to Fatca, such as the financial institutions that must report. They also set out the due diligence procedures required to identify the reportable accounts, the information to be reported and the timelines.
The remaining suggestions were rejected as they were inconsistent with either Singapore's policy on the implementation of the IGA or with the provisions of the IGA.