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Financial firms in Singapore must now establish tax residency status of customers: Iras
SINGAPORE-BASED Financial Institutions (SGFIs) are now required to establish the tax residency status of all their account holders under the Common Reporting Standard (CRS), which has been in effect since January 1, 2017.
The CRS is an internationally agreed standard for the automatic exchange of information (AEOI) on financial accounts between jurisdictions for tax purposes. It aims to enhance tax transparency to detect and deter tax evasion through the use of offshore bank accounts. Singapore has made an international commitment to commence AEOI under the CRS in 2018.
On Friday, the Inland Revenue Authority of Singapore (Iras) said that financial firms - depository institutions such as banks, specified insurance companies, investment entities and custodial institutions - must also report to the tax authority the financial account information of customers who are tax residents of jurisdictions with which Singapore has a Competent Authority Agreement (CAA) to exchange the information.
To-date, Singapore has signed CAAs with Australia, United Kingdom, Japan, Republic of Korea, South Africa, Norway, Italy, Canada, Finland, the Netherlands, Iceland, Malta, Ireland, Latvia and New Zealand.
All account holders of SGFIs should provide their financial institutions with information and supporting documents to establish their tax residency status.
For accounts opened before Jan 1, 2017, financial institutions may contact the account holders to confirm their tax residency status if the FIs hold information that indicates they could be foreign tax residents. For new accounts opened on or after Jan 1, 2017, financial institutions will use a self-certification form, to be filled in by account holders, to collect tax residency information.
"It is important that account holders cooperate fully with their FIs when approached. If the account holders do not respond to their FIs' requests to confirm their tax residency status, the FIs will have to treat the account holders as tax residents in the respective foreign jurisdictions, based on the information available to the FIs,'' Iras said.
Account holders should also inform their FIs of any change in circumstances, such as long-term job postings to a foreign jurisdiction, which may affect their tax residency status.
Deliberately providing false information to the FIs on an account holder's tax residency status is an offence under the CRS law. If convicted of the offence, an account holder could face a fine of up to S$10,000, imprisonment of up to two years or both.