The Singaporean government has made draft amendments to its local tax laws, in a move that is expected to align the city state with the OECD’s standard for effective exchange of information on tax matters.
Until now, the Inland Revenue Authority of Singapore has been prohibited from exchanging information with any of its double tax treaty partners unless there is a domestic tax issue at stake.
The new legislation would remove this domestic interest requirement. Singapore will be able to sign new tax treaties, and re-negotiate existing treaties, incorporating the OECD standard exchange of information clause, says Owi Kek Hean, head of tax services at KPMG in Singapore.
“Once Singapore enacts the new legislation it will be able to comply with requests for information from tax authorities where there is a likely case of tax evasion or tax avoidance,” said Owi.
The changes are not expected to be a burden for the majority of international or domestic companies. Foreign governments will not be able to go on so-called fishing expeditions for tax information.
However in some cases where there is enough evidence of potential tax avoidance the Singapore government will be able to demand information from Singaporean companies required by the foreign government even if the provision of this information would otherwise have been covered by the banking secrecy laws.
The new legislation and renegotiation of at least 12 treaties will probably see Singapore move to the white list, the list of countries that comply with the internationally agreed tax standard.