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Monday, 16 March 2009
Lifting bank secrecy veil may help Singapore
To date, 82 countries have endorsed the OECD standard for tax cooperation. Singapore is among the five which have not adopted it. The others are Hong Kong, Malaysia, Philippines and Cyprus, said KPMG’s Mr. Owi.
It is inevitable that Singapore will relax its banking secrecy rules, but that will not make it a less attractive private banking and financial centre, say private bankers and tax experts. Except for tax evaders.
‘They (the tax evaders) can run but where will they hide?’ said Owi Kek Hean, head of KPMG Tax Services. People who park money here may not trust other jurisdictions or tax havens where the rule of law is not as robust as in Singapore.
Said Serge Forti, chief executive of BNP Paribas, Private Bank, Asia Pacific: ‘This is absolutely not the end of bank secrecy.’
The question, he said, is ‘about the meaning of tax evasion and how the foreign tax offices will use this new door opened’.
Added Ajit Prabhu, tax partner at Deloitte Singapore & Southeast Asia: ‘Tax evaders therefore would have cause to fear, and we believe rightly so.’
The Ministry of Finance recently said the tax laws here will be changed by the middle of the year as Singapore has decided to endorse the Organisation for Economic Co-operation and Development (OECD) standard for the effective exchange of information through avoidance of Double Taxation Agreements (DTAs).
In other words, Singapore will, through its DTAs, assist in ‘bona fide’ requests for information.
The tax experts say it is critical to amend Singapore’s tax laws to tackle cross-border tax evasion to avoid the tax-haven stigma. Otherwise, foreign investors will be under scrutiny by their home countries’ taxmen, which would mar Singapore’s appeal for multinational corporations (MNCs), said Mr. Owi.
With the downturn, tax evasion in offshore centres has become a pivotal issue and will figure on the agenda of the G20 summit in London on April 2.
According to a Reuters report, the OECD praised recent concessions on tax evasion by Singapore, Hong Kong, Andorra, the Isle of Man, Liechtenstein and the Cayman Islands.
‘Moves by a number of financial centres over recent weeks have given a welcome boost to efforts to promote transparency and exchange of information on tax matters,’ OECD secretary-general Angel Gurria said.
Hong Kong is also rushing to amend its tax laws. Switzerland, too, has agreed to relax its banking secrecy laws. Debate there had reached hysterical levels ever since it allowed UBS to hand over 300 names to the US taxman.
Given the current mood in the developed world, maintaining status quo is not really an option, said Anuj Kagalwala, corporate tax partner at PricewaterhouseCoopers Services.
Lifting the veil ‘could create greater acceptance of Singapore as a private banking centre from the governments of the developed world, and encourage individuals in those countries to take advantage of Singapore’s high standards of security and regulation in the banking industry’, he said. ‘Another benefit of this potential relaxation is that it could pave the way for a tax treaty with the US, which has until now been prevented by this issue.’
Singapore has signed 60 double taxation treaties but not with the United States.
Chong Lee Siang, Ernst & Young partner, international and corporate tax services, sees another benefit. ‘This could help Singapore resident individuals and corporates in reducing their overseas tax costs,’ he said.
After amending its laws, Singapore will be able to extend further cooperation on information exchange through its DTAs with other countries, and hopes to negotiate and conclude more DTAs, says the Ministry of Finance.
To date, 82 countries have endorsed the OECD standard for tax cooperation. Singapore is among the five which have not adopted it. The others are Hong Kong, Malaysia, Philippines and Cyprus, said KPMG’s Mr. Owi.
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Lifting bank secrecy veil may help Singapore
Siow Li Sen
16 March 2009
It is inevitable that Singapore will relax its banking secrecy rules, but that will not make it a less attractive private banking and financial centre, say private bankers and tax experts. Except for tax evaders.
‘They (the tax evaders) can run but where will they hide?’ said Owi Kek Hean, head of KPMG Tax Services. People who park money here may not trust other jurisdictions or tax havens where the rule of law is not as robust as in Singapore.
Said Serge Forti, chief executive of BNP Paribas, Private Bank, Asia Pacific: ‘This is absolutely not the end of bank secrecy.’
The question, he said, is ‘about the meaning of tax evasion and how the foreign tax offices will use this new door opened’.
Added Ajit Prabhu, tax partner at Deloitte Singapore & Southeast Asia: ‘Tax evaders therefore would have cause to fear, and we believe rightly so.’
The Ministry of Finance recently said the tax laws here will be changed by the middle of the year as Singapore has decided to endorse the Organisation for Economic Co-operation and Development (OECD) standard for the effective exchange of information through avoidance of Double Taxation Agreements (DTAs).
In other words, Singapore will, through its DTAs, assist in ‘bona fide’ requests for information.
The tax experts say it is critical to amend Singapore’s tax laws to tackle cross-border tax evasion to avoid the tax-haven stigma. Otherwise, foreign investors will be under scrutiny by their home countries’ taxmen, which would mar Singapore’s appeal for multinational corporations (MNCs), said Mr. Owi.
With the downturn, tax evasion in offshore centres has become a pivotal issue and will figure on the agenda of the G20 summit in London on April 2.
According to a Reuters report, the OECD praised recent concessions on tax evasion by Singapore, Hong Kong, Andorra, the Isle of Man, Liechtenstein and the Cayman Islands.
‘Moves by a number of financial centres over recent weeks have given a welcome boost to efforts to promote transparency and exchange of information on tax matters,’ OECD secretary-general Angel Gurria said.
Hong Kong is also rushing to amend its tax laws. Switzerland, too, has agreed to relax its banking secrecy laws. Debate there had reached hysterical levels ever since it allowed UBS to hand over 300 names to the US taxman.
Given the current mood in the developed world, maintaining status quo is not really an option, said Anuj Kagalwala, corporate tax partner at PricewaterhouseCoopers Services.
Lifting the veil ‘could create greater acceptance of Singapore as a private banking centre from the governments of the developed world, and encourage individuals in those countries to take advantage of Singapore’s high standards of security and regulation in the banking industry’, he said. ‘Another benefit of this potential relaxation is that it could pave the way for a tax treaty with the US, which has until now been prevented by this issue.’
Singapore has signed 60 double taxation treaties but not with the United States.
Chong Lee Siang, Ernst & Young partner, international and corporate tax services, sees another benefit. ‘This could help Singapore resident individuals and corporates in reducing their overseas tax costs,’ he said.
After amending its laws, Singapore will be able to extend further cooperation on information exchange through its DTAs with other countries, and hopes to negotiate and conclude more DTAs, says the Ministry of Finance.
To date, 82 countries have endorsed the OECD standard for tax cooperation. Singapore is among the five which have not adopted it. The others are Hong Kong, Malaysia, Philippines and Cyprus, said KPMG’s Mr. Owi.
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