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Cablegate: Singapore Passes Tax Info Sharing Law, Eyes U.S. Tax

VZCZCXRO4431
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #1016 2930930
ZNR UUUUU ZZH
R 200930Z OCT 09
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 7333
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SINGAPORE 001016

TREASURY FOR TRAND, MNUGENT
STATE PASS USTR

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN EINV SN

SUBJECT: SINGAPORE PASSES TAX INFO SHARING LAW, EYES U.S. TAX
AGREEMENT

REF: SINGAPORE 381

1. (SBU) Summary: Singapore took a step to exiting the
Organization for Economic Cooperation and Development (OECD) "grey
list" of tax havens by passing tax amendments that improve its
ability to exchange tax information with foreign authorities.
Singapore is also renegotiating existing Double Taxation Agreements
(DTA) to include the OECD standard on exchange of information.
Finance officials hope the tax changes will open the way to begin
negotiations for a DTA with the United States. Officials said
previous roadblocks to completing an agreement should no longer be
barriers. End Summary.

2. (SBU) Singapore's Parliament passed amendments to its Income Tax
Act October 19 that incorporate the OECD standard for exchange of
information through Avoidance of Double Taxation Agreements (DTAs).
The amendments will become law after approval by the President and
being published in the government gazette, a process GOS officials
believe will be completed within three weeks.

Coming Off the Grey List
------------------------

3. (SBU) Singapore pushed through the amendments in a bid to shed
its reputation as a haven for tax cheats. In April the OECD placed
Singapore on its "grey list" of countries that had committed to the
exchange of information standard but had yet to fully implement it,
much to the displeasure of Singapore officials (reftel). According
to the OECD, the standard requires exchange of information on
request in all tax matters for the administration and enforcement of
domestic tax law without regard to a domestic tax interest
requirement or bank secrecy for tax purposes. The new amendments
lift Singapore's previous domestic interest condition that allowed
Singapore tax authorities to share tax information only if that
information was relevant to the enforcement of Singapore's own tax
laws. However, Finance Minister Tharman told Parliament that
requests from foreign authorities would need to be "clear, specific,
relevant, and consistent with the exchange of information standard,"
and that tax authorities would not accept "fishing expeditions" --
indiscriminate requests without specific information.

4. (SBU) Singapore is also renegotiating existing DTAs to include
the exchange of information standard. The OECD has stated it will
remove countries from the grey list after they have signed at least
twelve DTAs with the standard language. Singapore has renegotiated
eleven since April, and expects to sign several more within a matter
of weeks. The treaties will come into force after the tax
amendments become law. FOO Gouzhi, Head of International Tax at the
Ministry of Finance, told Econoff that the Ministry does not plan to
renegotiate all its DTAs, but will renegotiate agreements with
countries that would like the exchange of information language
included in the agreement.

And Now For a U.S. DTA?
-----------------------

5. (SBU) Foo said Singapore is open to discussing a DTA with the
United States based on the U.S. model, and the GOS is prepared to
move ahead with negotiations whenever the U.S. agrees. Earlier
discussions about a possible DTA with the United States in 2006
foundered in part on Singapore's lack of exchange of information
provisions in their tax laws, but also their unwillingness to
include limitation of benefits provisions in the agreement that
would prevent third country residents from obtaining treaty
benefits. Foo said Singapore would be willing to discuss this issue
at future negotiations and did not believe it would be a barrier to
concluding a DTA.

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