Singapore on Friday qualified for removal from the anti-tax avoidance “grey list” maintained by the Organisation for Co-operation and Development after it signed a twelfth bilateral information-sharing agreement.
The agreement, signed by the French and Singaporean finance ministers, takes the island state past the threshold for inclusion on the OECD’s “white list” of countries whose tax law allows exchanges of information with other jurisdictions.
Singapore amended its law on the release of information after a campaign by European countries and the US to end tax avoidance by citizens holding funds in a variety of countries that were potentially out of reach of domestic tax authorities.
Group of 20 leaders in April asked governments to make taxpayers disclose more information and to require banks and other financial institutions to report dealings involving tax havens.
The city-state’s revised law allows for exchanges of information with the tax authorities of other countries where specific information is requested, but bars so called “fishing expeditions”.
“We will only provide assistance where there is a genuine case on hand, and the requested information is specific and relevant to the case,” Tharman Shanmugaratnam, finance minister, told parliament during the passage of the legislation.
“Spurious or frivolous requests for information will not be acceded to.”
The island was placed on the “grey list” in April, along with other countries that had yet to comply fully with OECD standards on the exchange of tax information. Switzerland and Liechtenstein have also been removed after signing bilateral tax agreements.
Mr Shanmugaratnam said Singapore would sign more bilateral information sharing agreements before the end of this year.
Private bankers say that Singapore’s decision to relax its secrecy laws will not affect the flow of funds into its rapidly expanding wealth management industry because it will buttress the city-state’s reputation for effective regulation.
Singapore has signed similar agreements with Belgium, New Zealand, the UK, Denmark, the Netherlands, Australia, Austria, Norway, Qatar, Mexico and Bahrain.
“Singapore will also be playing an active role in the Global Forum on Transparency and Exchange of Information, and we are pleased to have been recently appointed as the vice chairman of the Global Forum’s Peer Review Group,” Mr Shanmugaratnam said.
“Like Singapore’s high ratings by the Financial Action Task Force for its role in the global anti-money laundering effort, these recent steps are consistent with our role as a responsible and well-regulated financial jurisdiction,” Mr Tharman said.
Angel Gurría, OECD secretary-general, said the signing marked a major step forward in international tax co-operation.
”Singapore is a key player in the global financial community,” Mr Gurría said. “The fact that Singapore has removed the legislative impediments to its implementation of the international standard is very welcome and it confirms that there is a new global environment of tax cooperation. No jurisdiction can stand apart from this movement towards greater transparency for tax purposes.”
Christine Lagarde, the French finance minister, said she was “particularly pleased” to sign the agreement. “It is a significant breakthrough to see such an important financial place reaching the OECD white list,” she said.
