SINGAPORE - Singapore and Indonesia are working on implementing a framework for the automatic exchange of information (AEOI) on tax matters, as both governments continue to improve trade and investment ties.
The commitment was highlighted during a meeting between Deputy Prime Minister and Finance Minister Mr Tharman Shanmugaratnam and Indonesia's Finance Minister Mr Bambang Brodjonegoro on Monday.
The AEOI is a new standard developed by the Organisation for Economic Cooperation and Development. It entails periodic and systemic transmission of taxpayer information in bulk to enable more timely actions again tax evasion. The existing international standard only exchanges information upon request.
Indonesia will implement AEOI by 2017, followed by Singapore a year later, but Singapore wants to make sure there's ample protection for confidentiality as well as reciprocity in data swop, the Ministry of Finance said in a statement on Tuesday.
"AEOI needs to be done within a robust framework of law to protect taxpayer confidentiality and ensure that the information is used properly," the MOF said. "There must also be reciprocity with any future AEOI partners in terms of information exchange."
Ahead of AEOI, both nations will work on updating the existing Avoidance of Double Taxation Agreement to incorporate the current standard on information exchange upon request, the Ministry added.
Meanwhile, Singapore's immediate priority is to implement the Foreign Account Tax Compliance Act (FATCA) agreement with the United States, MOF stressed.
The US enacted FATCA in 2010 to crack down on non-compliance with US tax laws by citizens using foreign accounts. Singapore signed the agreement to implement FACTA on Dec 9 after negotiations since 2013.