Singapore Set to Attract More Wealth Management Business after Concluding FATCA: Rikvin
In an attempt to clean the image of Singapore as a tax haven and to wipe out money laundering activities, Singapore has concluded an Inter-governmental agreement (IGA), Foreign Account Tax Compliance Act (FATCA) with the United States. The stringent compliance required by the act will attract genuine funds to the island nation and in-the-process boost the region’s wealth management business, according to an analysis by Rikvin, Singapore’s business-setup firm.
Located in the center of the Southeast Asia, Singapore is a hub for foreign investments in the Asia Pacific region. The exemplary growth of Singapore in the wealth management sector can be attributed to lower corporate tax, tax-free dividends, no capital gains tax, strong currency and above all ‘ease of doing business’. Additionally, there are no major restrictions on foreign exchange transactions and capital movements.
FATCA clamp down to boost wealth management
As a part of strengthening its Exchange of Information (EOI) framework, Singapore has concluded the information sharing agreement, FATCA, with United States. The Ministry of Finance (MOF), Monetary Authority of Singapore (MAS) and the Inland Revenue Authority of Singapore (IRAS) said in a joint statement that financial institutions in Singapore will disclose information on accounts held by U.S. entities to the IRAS. The international agreement for bilateral tax co-operation is intended to crackdown on illegal financial entities and money laundering activities.
The act requires financial institutions outside of the US to pass information about financial accounts held by U.S. persons to the US tax administration, the Inland Revenue Service (IRS). This means the U.S. citizens, permanent residents and entities will have to regularly submit information on financial accounts held in Singapore. FATCA is set to take effect from July 1.
The requirement of FATCA compliance will augur well for the wealth management business in Singapore.
“This is because more genuine financial entities are generally skeptical about investing in a market infested by illegal funds. Such funds are speculators and invest heavily in derivatives, thereby escalating volatility and increasing the overall risk profile of the market. Blocking these funds makes strong financial sense for Singapore, as a number of genuine funds will be encouraged to invest in an attractive market,” affirmed Ms. Christine Lim, General Manager of Rikvin.
No negative impact
According to experts, the fund management space is unlikely to be hit after the new regulation takes effect. In fact the agreement would promote greater transparency in terms of information exchange. Financial reporting for funds would be actually easier with regards to systems and processes.
“The FATCA agreement will serve as a strong measure to clean up Singapore’s reputation internationally and will clamp down heavily on the funds that distort financial markets and increase market risk. Genuine funds would now find Singapore a much safer place to invest. The ultimate result would be Singapore’s cleaner image and huge growth in the wealth management business,” pointed Ms. Lim.
Established in 1998, Rikvin has since partnered with thousands of investors, entrepreneurs and professionals in their pursuit to access business opportunities overseas. Rikvin’s areas of expertise include company incorporation, accounting, taxation and other related corporate services. Rikvin is also a licensed employment agency with the Ministry of Manpower (MOM) and offers a full spectrum of Singapore work visa services for professionals who wish to relocate to Singapore.