The US government has struck an intergovernmental agreement (IGA) with Singapore, seeking its support in addressing overseas tax dodging issues by the US citizens.
Through this tax information-sharing agreement, Singaporean firms will provide their local tax authority with details of US account-holders, which will be passed on to the US Internal Revenue Service (IRS), bypassing the need of directly contacting the US tax authorities.
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The deal is expected to be finalized by the end of 2014.
The US is set to introduce Foreign Account Tax Compliance Act of 2010 (FATCA) starting 1 July 2014, under which, overseas banks, investment funds and insurers are liable to provide IRS with information about Americans accounts with more than $50,000.
The foreign companies could be charged with a 30% withholding tax on their US investment income. Non compliance with the act will lead to freezing of company accounts in US capital markets.
PricewaterhouseCoopers’ FACTA lead for Southeast Asia Michael Brevetta was quoted by Reuters as saying, "The advantage this gives to Singapore institutions is the certainty on how they should go about their compliance efforts and make the relevant registrations."
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By GlobalDataEarlier in March 2014, Hong Kong has signed a separate tax information agreement with the US as the first stage of IGA deal.
China is also holding talks with US Treasury to strike such a deal.
The US, until now, has signed 60 IGAs including deals with Indonesia, Peru and Kuwait.
