Singapore activates three new Automatic Exchange of Financial Account Information relationships
Singapore has activated three new Automatic Exchange of Financial Account Information (AEOI) relationships under the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange of Financial Account Information under the Common Reporting Standard (CRS MCAA) with China, Malaysia and Panama for exchange in 2018.
AEOI entails systematic and regular (such as annual) transmission of taxpayer information. AEOI deals with the challenge of taxpayers operating cross-border but tax administrations remaining confined to their national borders, by providing an open international architecture.
The MCAA provides a standardised and efficient mechanism to facilitate the automatic exchange of information. It avoids the need for several bilateral agreements to be concluded. Its design as a framework agreement means the MCAA always ensures each signatory has ultimate control over exactly which exchange relationships it enters into and that each signatory’s standards on confidentiality and data protection always apply. The text and signatories of the MCAA can be found here.
A total of 64 AEOI relationships have been established by Singapore for the first exchange to take place in 2018.
More details on the 64 relationships can be found on Organisation for Economic Co-operation and Development (OECD)’s Automatic Exchange Portal and the Internal Revenue Authority of Singapore (IRAS)’s Common Reporting Standard webpage.
The Common Reporting Standard (CRS) is an internationally-agreed standard endorsed by the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes (GF). The CRS sets out the financial account information to be exchanged, the financial institutions (FIs) required to report, the different types of accounts and taxpayers covered, as well as the customer due diligence procedures to be followed by FIs.
The CRS seeks to enhance cross-border tax transparency and deter tax evasion by taxpayers through the use of offshore bank accounts. As of 5 April 2018, there are over 2700 bilateral exchange relationships activated with respect to 80 jurisdictions committed to the CRS.
Singapore endorsed the CRS in 2014. The CRS Regulations requires and empowers all FIs to put in place necessary processes and systems to collect financial account information from 1 January 2017. Singapore has adopted the “wider approach”, which means that FIs will need to collect and retain the CRS information for all account holders, and where the account holder is a Passive Non-Financial Entity (NFE), the controlling persons of the Passive NFE in the case of new accounts, instead of only for account holders and controlling persons who are tax residents of Singapore’s CAA partners.
For CRS reporting purposes, SGFIs will need to transmit to IRAS the financial account information relating to tax residents of Singapore’s CAA partners from 2018. IRAS will subsequently exchange the reported information with Singapore’s CAA (Competent Authority Agreement) partners.