8 May 2014
In a joint media release dated 6 May 2014, the Ministry of Finance, Monetary Authority of Singapore and Inland Revenue Authority of Singapore (“IRAS”) announced that Singapore and the United States (“US”) have substantially concluded discussions on an Intergovernmental Agreement (“IGA”) that will facilitate compliance with the US Foreign Account Tax Compliance Act (“FATCA”) by Singapore-based financial institutions.
The FATCA is a US law which targets non-compliance with US tax laws by US persons using foreign accounts. FATCA requires all financial institutions (“FIs”) outside the US to regularly transmit information about financial accounts held by US persons to the US Internal Revenue Service (“US IRS”). FIs that fail to comply will face a 30% FATCA-related withholding tax on certain payments made from the US to them.
The US has developed IGA models and reached out to partner jurisdictions using these bilateral IGAs as tools to facilitate FIs’ compliance with FATCA:
- Model 1 establishes a framework of FIs outside the US to report account information of US persons to their relevant domestic authority, which will in turn provide the information to the US IRS;
- Model 2 establishes a framework of FIs outside the US to directly report account information of US persons to the US IRS, which is supplemented by information exchange upon request between the US and its relevant government counterpart.
Singapore has now initialled a Model 1 IGA with the US and has been included on 5 May 2014 in the US Treasury’s list of jurisdictions that are treated as having an IGA in effect. Following this, Singapore and the US are expected to sign IGA in the second half of 2014. The Singapore-US IGA will be published on the IRAS website thereafter.
From now until 31 December 2014, Singapore-based FIs can register at the US IRS’ FATCA Registration Portal as a “Registered Deemed-Compliant FFI” within a Model 1 IGA jurisdiction and obtain a Global Intermediary Identification Number (“GIIN”). This will ensure that there is no FATCA-related withholding tax on payments made to them from the US.
For more information on FATCA, please refer to the IRS and the IRAS websites.
Source: Ministry of Finance, Monetary Authority of Singapore and Inland Revenue Authority of Singapore