In an effort to combat tax evasion, the Inland Revenue Authority of Singapore (IRAS) and the Australian Tax Office (ATO) have entered into a Competent Authority Agreement, which will automatically share financial account information of residents of each country. This will include the information of accounts held in Singapore by Australian tax residents, as well as accounts held in Australia by Singapore tax residents. The automatic exchange of information will be based on the Common Reporting Standard developed by the Organisation for Economic Cooperation and Development.
This agreement will come into effect in September, 2018, along with 101 other jurisdictions (so far) who are already committed to automatically share financial information from 2018.
This is a positive step for both countries. With approximately 25,000 to 30,000 Australians living in Singapore, and over 50,000 Singaporeans living in Australia, this agreement will have a significant impact in strengthening the relationship of the two nations.
“Both jurisdictions are satisfied with the confidentiality rules and data safeguards that are in place in the other jurisdiction to ensure the confidentiality of information exchanged and prevent its unauthorised use,” Australian Taxation Office and Inland Revenue Authority of Singapore said in a joint statement.
Last year Singapore, a trading hubs of the world’s largest commodity companies, came under scrutiny from the governments of some resource-producing countries such as Australia who said they suspect the companies are using units in the Southeast Asian financial centre to avoid tax.
The companies deny any improper transfer pricing and say they are in Singapore to be closer to Asian clients, to local expertise and trade routes, as the region accounts for a growing share of their business.
Singapore’s private banking industry is already facing pressure from an Indonesia tax amnesty that comes amid heightened global scrutiny over undeclared wealth. Singapore and Indonesia have yet to sign a bilateral agreement to share financial data.
Singapore has said previously it would only agree to exchange information with countries that can ensure the confidentiality of the data they provide and offer reciprocity.
Endnotes:
1. Reuters: “Singapore, Australia agree to share financial data to fight tax evasion”, 2016, <>http://www.reuters.com/ article/singapore-australia-tax-idUSL3N1BI1ND>;
2. Singapore Business: “Singapore and Australia to combat tax evasion”, 2016, <http://sbr.com.sg/financial-services/ commentary/singapore-and-australia-combat-tax-evasion>;
3. The Straight Times: “Singapore, Australia to share financial data to stop tax evasion”, 2016, <http://www.straitstimes. com/business/economy/singapore-australia-to-share-financial-data-to-stop-tax-evasion>;
4. Reuters: “Singapore, Australia agree to share financial data to fight tax evasion”, 2016, <http://www.reuters.com /article/singapore-australia-tax-idUSL3N1BI1ND>.
