Singapore Passes Tax Information Exchange Law

by Mary Swire, Tax-News.com, Hong Kong

22 October 2009

Singapore’s parliament has passed the Income Tax (Amendment) (Exchange of Information) Bill, which will allow the country to implement the internationally agreed OECD standard for the exchange of information (EOI) for tax purposes.

The changes contained in the bill will enhance the level of assistance and information Singapore can provide to foreign jurisdictions under bilateral double taxation agreements (DTAs), as explained in a speech by the Minister of Finance, Tharman Shanmugaratnam, to parliament.

He said that previously the assistance that Singapore could give through DTAs was subject to the domestic interest condition, meaning that the information requested had to be relevant to the enforcement of domestic tax laws before the Inland Revenue Authority of Singapore (IRAS) could gather and exchange it with DTA partners. Only where there was a domestic interest, would Singapore’s banking and trust confidentiality laws allow for information to be obtained for the purposes of investigating or prosecuting a tax offence.

The new EOI standard for exchange of information, Shanmugaratnam said, enhances the scope of information exchange cooperation under DTAs by lifting the domestic interest condition and allowing for access to information from banks and trust companies under certain conditions. This enhanced scope of cooperation will not only allow Singapore to provide greater assistance to its prescribed treaty partners, he added, but also help Singapore obtain information for the enforcement of its own domestic tax laws.

Shanmugaratnam stressed that an integral aspect of the EOI standard is its respect for taxpayers’ rights. The bill therefore contains important safeguards in this respect. It requires requests for information to be specific, detailed and relevant to the tax affairs of a given taxpayer. Consistent with the standard, Singapore will only provide assistance where the requested information is specific and relevant to the case.

As the EOI standard applies to all forms of taxes, the IRAS will also be allowed to share information, not only on income taxes, but also that obtained under the Goods and Services Tax Act, the Stamp Duties Act, and the Property Tax Act, to fulfill Singapore’s exchange of information obligations under prescribed DTAs.

The legislative amendments contained in the Bill will enhance the level of assistance that Singapore can provide to those foreign jurisdictions whose DTA with Singapore incorporates the new standard. To date, Singapore has reached agreement with 20 jurisdictions to incorporate the EOI standard under bilateral DTAs, and has formally signed such agreements with 11 of these jurisdictions.

The passing of the bill is the latest move aimed at Singapore being removed from the "gray list" of jurisdictions that have not substantially implemented the EOI standard. Singapore expects to have the 12 necessary DTAs incorporating the EOI standard to be taken off the gray list by end-2009, at the latest.

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