Beware, evaders: Singapore and US seal the deal on tax compliance

Following the May agreement.

Now, Singapore-based FIs will need to perform due diligence checks to identify financial accounts held by US persons.

Singapore and the US signed a Foreign Account Tax Compliance Act (FATCA) Model 1 Intergovernmental Agreement (IGA) yesterday, following the initialling of the agreement on 5 May 2014. The IGA was signed by Deputy Secretary (Policy) of the Singapore Ministry of Finance, Ng Wai Choong and the US Ambassador to Singapore, Kirk Wagar.

According to a media release, after the FIs perfrom due diligence checks, they will need to transmit information pertaining to such accounts to the Inland Revenue Authority of Singapore, which will in turn transmit the information to the US Internal Revenue Service.

Singapore and the US have been discussing a reciprocal FATCA arrangement, under which the US would extend similar cooperation to Singapore.

FATCA is a US law which targets non-compliance with tax laws by US persons using overseas accounts. Under FATCA, all financial institutions (FIs) outside of the US are required to regularly submit information on financial accounts held by US persons to the US Internal Revenue Service, or be subject to a 30% withholding tax on certain payments from the US. FATCA will not affect Singapore citizens who have no US tax liabilities.