SINGAPORE AND THE US SIGN THE FOREIGN ACCOUNT TAX COMPLIANCE ACT MODEL 1 INTERGOVERNMENTAL AGREEMENT
On 9 December 2014, the Government of Singapore and the Government of the United States signed an intergovernmental agreement (“IGA“) to facilitate the implementation of the Foreign Account Tax Compliance Act (“FATCA“) in Singapore. The IGA is based on the United States Department of the Treasury’s Model 1 IGA and was signed following the announcement in May 2014 that Singapore and the US have reached an agreement in substance regarding a Model 1 IGA. A copy of the IGA can be found on the website of the Inland Revenue Authority of Singapore (“IRAS“).
FATCA was enacted in March 2010 in the US to detect and deter US tax evasion by US persons. FATCA requires financial institutions outside of the US to provide information to the US Internal Revenue Service in relation to accounts held by US persons. Non-compliance will result in financial penalties on the financial institutions.
The Ministry of Finance, Monetary Authority of Singapore and IRAS published the draft Income Tax (International Tax Compliance Agreements) (United States of America) Regulations 2014 (the “Regulations“) and a draft e-Tax Guide on Compliance Requirements of the Singapore-US Intergovernmental Agreement on Foreign Account Tax Compliance Act (the “e-Tax Guide“) for public consultation in October 2014. Our previous Client Alert on this can be accessed here.
The final Regulations and e-Tax Guide are expected to be released in January 2015.
Prior to the release of the final IGA text, many financial institutions relied on the US Treasury Model IGAs to prepare for FATCA. Although the final IGA text generally mirrors the Model IGAs, financial institutions should review their preparations and obligations in light of the final IGA provisions applicable in Singapore.
