Asian banking powerhouse Singapore on Friday cleared the final hurdle for complying with a global clampdown on tax cheats by signing an agreement with France to share tax information.
The signing enabled the city-state to get off a “grey list” of countries that have not yet fully implemented standards set by the Organisation for Economic Cooperation and Development (OECD), the industrialised nations’ club.
The Avoidance of Double Taxation Agreement (DTA) was signed by Singapore’s Finance Minister Tharman Shanmugaratnam and his French counterpart Christine Lagarde, part of an international effort to crack down on savers who keep secret deposits overseas and so evade their national taxman.
It was the 12th such agreement signed by Singapore — the minimum required by the OECD for a country to enter the elite “white list” of financial centres — and will come into force after formal passage by both parliaments.
“I am particularly pleased to sign today the 12th protocol which allows the withdrawing of Singapore from the OECD grey list,” Lagarde said.
The French minister said it was a “significant breakthrough” to see “such an important financial place” like Singapore reaching the OECD white list.
Shanmugaratnam said Singapore, which rejects allegations that it is used by foreigners as a haven for so-called “hot money” from illicit sources, will not stop at 12 agreements.
“We expect to sign several more by the end of the year and will continue to negotiate such DTAs,” he said.
The United States has been spearheading the OECD drive, forcing Switzerland to end its cherished tradition of banking secrecy under a landmark settlement in August that could see hundreds of US bank account holders prosecuted.
New legislation backed by the White House would force foreign financial institutions and companies to divulge information about their US account-holders or risk being frozen out of the giant US financial system.
After entering the white list, Singapore signed a deal to incorporate the OECD standards into its existing DTA with Southeast Asian neighbour Brunei, an oil-rich sultanate whose currency is pegged to the Singapore dollar.
Singapore, a top Asian corporate centre and a favourite banking destination for the world’s millionaires, has denied being a haven for tax evaders.
Local banks rejected allegations in September by a US-based human rights group that Myanmar’s military rulers were stashing billions of dollars from gas-industry revenues in Singapore.
The city-state last month passed a law aimed at tightening the screws on cross-border tax cheats to comply with the OECD standards.
Shanmugaratnam said after the signing with France that for Singapore to retain its position as a top financial centre, the system had to be trusted and well-regulated.
“We’re not defensive on the issue because we are currently held in high regard by all leading regulators,” he told reporters.
“We see this move as a right move that has to be taken by all countries.”
Singapore has assured depositors that there will be no indiscriminate prying into taxpayers’ accounts even after it complies with the OECD standards.