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Singapore activates three new Automatic Exchange of Financial Account Information relationships

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.

Source: Automatic Exchange of Information: What it is, How it works, Benefits and What remains to be done

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. 

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