Singapore to Crack Down on Tax Dodgers

October 15, 2012Taxesby EW News Desk Team

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In a bid to protect its reputation as a “trusted financial centre”, Singapore is clamping down on foreigners who evade taxes by shifting money to its banks.

In a deal announced by the Singapore government and visiting German finance minister Wolfgang Schauble on Sunday, both countries will incorporate the latest Organisation for Economic Cooperation and Development standards on exchanging information in their double taxation accord.

When the accord is ratified in both countries, authorities will share information about all forms of tax, not just income and capital taxes, the German ministry added.

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The two ministries added:

Banking secrecy will not constitute an obstacle to exchanging information.

According to media reports, growing evidence suggest that wealthy German citizens are moving their funds to Singapore ahead of a new German-Swiss tax treaty that will take effect next year.

As part of the tax treaty, the Swiss government will withhold taxes due on German accounts in Swiss banks, but will not provide German authorities with the names of the account holders.

Germans hold an estimated 180 billion euros ($232 billIon) in Swiss banking accounts.

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Singapore's central bank said in August it had warned banks last year to guard against funds being transferred into the island state to evade taxation elsewhere, with an eye to new tax treaties being implemented in Europe.

Last week, the Monetary Authority of Singapore announced plans to penalise banks that facilitated tax evasion, designating tax crimes as money laundering “predicate offences.” This brings Singapore into line with new requirements announced in February by the Paris-based Financial Action Task Force designating tax crimes as money laundering offences.

The Monetary Authority of Singapore said this was to “discourage the entry of tax evasion monies into our financial system and protect Singapore’s reputation as a trusted financial centre” and added that “Singapore is fully committed to safeguard its financial system from being used to harbour proceeds from tax crimes.”

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