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Singapore’s parliament on Monday passed a bill that will bring the city-state’s tax law in line with the international standard set by the Organization for Economic Cooperation and Development (OECD) to fight tax evasion across borders. Singapore had been under international pressure to improve banking transparency and had been put on a “grey list” by OECD as a state committed to the international standard on sharing information on taxes but not yet substantially implementing it.
The amendments now passed by the legislators “will allow Singapore to implement the new internationally agreed standard,” said Finance Minister Tharman Shanmugaratnam.
“The changes we are enacting are fully in keeping with Singapore’s status and reputation as a trusted and responsible business and financial hub committed to the international efforts to combat cross-border tax evasion,” he said.
According to the new tax bill, the government could ask banks for client information in potential cases of foreign tax evasion, while the old law was restricted to domestic tax cases.
So far, Singapore had formally signed amended tax agreements which include the OECD standard with 11 countries, said Tharman.
To get on OECD’s “white list,” governments have to sign 12 bilateral tax agreements in line with the standard of tax information.
OECD has drawn up black, grey and white lists of countries based on their willingness to adhere to its standards.
Singapore passes tax law to improve transparency
Nopporn Wong-Anan & Neil Chatterjee
Singapore, under pressure from the G20 to improve banking transparency, passed a bill in Parliament on Monday amending its income tax law to comply with OECD standards to fight cross border tax evasion.
The new bill enables the Singapore government to ask banks for client information in potential cases of foreign tax evasion, and not just for domestic tax cases as allowed by the previous law.
‘This enhanced scope of cooperation will not only allow Singapore to provide greater assistance to its prescribed treaty partners, but also help Singapore obtain information for the enforcement of our domestic tax laws,’ said Finance Minister Tharman Shanmugaratnam in Parliament.
The Group of 20 leading industrialised and emerging nations agreed in April to crack down on countries that failed to help in cross-border tax evasion cases.
At the time, the Organisation for Economic Co-operation and Development (OECD) published a ‘grey list’ of more than 30 countries that had agreed to improve transparency but had not signed the necessary international accords, of which Singapore was one.
Singapore endorsed the OECD standard for the exchange of information for tax purposes in March and has been renegotiating existing agreements with various countries since then. These international agreements require the new domestic legislation.