Known as an Intergovernmental Agreement (IGA), the deal requires Singapore-based financial institutions to comply with the US Foreign Account Tax Compliance Act (FATCA).
FATCA, which is set to take effect on July 1, requires all financial institutions outside the US to regularly submit information on financial accounts held by US “persons” to the US Internal Revenue Service (IRS).
In a joint statement on Tuesday, the Ministry of Finance (MOF), Monetary Authority of Singapore (MAS) and the Inland Revenue Authority of Singapore (IRAS) said Singapore-based financial institutions will report information on financial accounts held by US account holders to the IRAS.
IRAS will then provide the information to the US IRS.
The joint statement added that “transmitting this information through IRAS helps to ease the compliance burden for our financial institutions as their reporting obligations would be deemed met once they have transmitted the information to IRAS.”
Singapore has initialled the IGA, and both sides are expected to sign the agreement in the second half of 2014.
Foreign financial institutions that do not comply with FATCA will face a 30 per cent withholding tax on certain payments made to them from the US.
Source – CNA/fa