Singapore
This report analyses the implementation of the AEOI Standard in Singapore with respect to the requirements of the AEOI Terms of Reference. It assesses both the legal frameworks put in place to implement the AEOI Standard and the effectiveness of the implementation of the AEOI Standard in practice.
The methodology used for the peer reviews and that therefore underpins this report is outlined in Chapter 2.
Overall findings
AEOI legal framework
Singapore’s legal framework implementing the AEOI Standard is in place and is consistent with the requirements of the AEOI Terms of Reference. This includes Singapore’s domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) and its international legal framework to exchange the information with all of Singapore’s Interested Appropriate Partners (CR2).
Effectiveness of AEOI in practice
Singapore’s implementation of the AEOI Standard is on track with respect to the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice. This includes ensuring Reporting Financial Institutions correctly conduct the due diligence and reporting procedures (CR1) and exchanging the information in an effective and timely manner (CR2). Singapore is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
Overall rating in relation to the effectiveness in practice: On Track
General context
Singapore commenced exchanges under the AEOI Standard in 2018.
In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, Singapore:
introduced the Income Tax (International Tax Compliance Agreements) (Common Reporting Standard) Regulations 2016; and
issued Frequently Asked Questions, which are not legally binding.
Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 January 2017. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete the due diligence procedures on High Value Individual Accounts by 31 December 2017 and on Lower Value Individual Accounts and Entity Accounts by 31 December 2018.
With respect to the exchange of information under the AEOI Standard, Singapore:
is a Party to the Convention on Mutual Administrative Assistance in Tax Matters and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2018; and
put in place 19 bilateral agreements.1
Table 1 sets out the number of Financial Institutions in Singapore that reported information on Financial Accounts in 2021 as defined in the AEOI Standard (essentially because they maintained Financial Accounts for Account Holders, or that were related to Controlling Persons, resident in a Reportable Jurisdiction). It also sets out the number of Financial Accounts that they reported in 2021. In this regard, it should be noted that Singapore requires the reporting of Financial Accounts based on a prescribed list of exchange partners and some accounts are required to be reported more than once (e.g. jointly held accounts or accounts with multiple related Controlling Persons), which is reflected in the figures below. These figures provide key contextual information to the development and implementation of Singapore’s administrative compliance strategy, which is analysed in the subsequent sections of this report.
Table 2 sets out the number of exchange partners to which information was successfully sent by Singapore in the past few years (including where the necessary frameworks were in place, containing an obligation on Reporting Financial Institutions to report information, but no relevant Reportable Accounts were identified). These figures provide key contextual information in relation to Singapore’s exchanges in practice, which is also analysed in subsequent sections of this report.
In order to provide for the effective implementation of the AEOI Standard, in Singapore:
the Inland Revenue Authority of Singapore (the IRAS, the tax authority) has been assigned the responsibility to ensure the effective implementation of the due diligence and reporting obligations by Reporting Financial Institutions and for exchanging the information with Singapore’s exchange partners;
the IRAS maintains a close working relationship with the Monetary Authority of Singapore (MAS) (the Central Bank and financial regulatory authority of Singapore) to enable the IRAS to effectively oversee the financial sector participants with obligations under the AEOI Standard; this close working relationship serves as a platform for the IRAS to consult with the financial regulator on AEOI-related matters such as industry developments, sector-specific regulatory risks or best practices in regulatory compliance reviews;
technical solutions necessary to receive and validate the information reported by Reporting Financial Institutions were put in place by IRAS, which are used to verify, sort and disseminate the data to be sent to Singapore’s exchange partners; and
the Common Transmission System (CTS) is used for the exchange of the information, along with the associated file preparation and encryption requirements.
It should be noted that the review of Singapore’s legal frameworks implementing the AEOI Standard concluded with the determination that Singapore’s domestic and international legal frameworks are In Place. This has been taken into account when reviewing the effectiveness of Singapore’s implementation of the AEOI Standard in practice.
Findings and conclusions on the legal frameworks
The detailed findings and conclusions on the AEOI legal frameworks for Singapore are below, organised per Core Requirement (CR) and then per sub-requirement (SR) as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Domestic legal framework: Jurisdictions should have a domestic legislative framework in place that requires all Reporting Financial Institutions to conduct the due diligence and reporting procedures in the CRS, and that provides for the effective implementation of the CRS as set out therein.
Singapore’s domestic legislative framework is in place and contains all of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (SRs 1.1 – 1.3). It also provides for a framework to enforce the requirements (SR 1.4).
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Singapore has defined the scope of Reporting Financial Institutions in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
Singapore has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in accordance with the CRS and its Commentary.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Singapore has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
Singapore has a legislative framework in place to enforce the requirements in accordance with the CRS and its Commentary.
CR2 International legal framework: Jurisdictions should have exchange relationships in effect with all Interested Appropriate Partners as committed to and that provide for the exchange of information in accordance with the Model CAA.
Singapore’s international legal framework to exchange the information is in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of Singapore’s Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from Singapore and that meet the required standard in relation to confidentiality and data safeguards) (SRs 2.1 – 2.3).
SR 2.1 Jurisdictions should have exchange agreements in effect with all Interested Appropriate Partners that permit the automatic exchange of CRS information.
Singapore has exchange agreements that permit the automatic exchange of CRS information in effect with all its Interested Appropriate Partners.
SR 2.2 Such an exchange agreement should be put in place without undue delay, following the receipt of an expression of interest from an Interested Appropriate Partner.
Singapore put in place its exchange agreements without undue delay.
SR 2.3 Jurisdictions should ensure that the exchange agreements in effect provide for the exchange of information in accordance with the requirements of the Model CAA.
Singapore’s exchange agreements provide for the exchange of information in accordance with the requirements of the Model CAA.
Assessed jurisdiction’s comments on the assessment of its legal frameworks
Singapore has been a member of the Global Forum on Transparency and Exchange of Information since its establishment as a self-standing body in 2009.
We are pleased with the overall determination of our legal framework to be “In Place” as assigned under the current review based on the AEOI Terms of Reference. It affirms the robustness of Singapore’s Exchange of Information (EOI) regime, and that the regime is in line with the international AEOI Standard based on the Common Reporting Standard.
Singapore remains fully committed to the AEOI standard and will continue to ensure that our EOI regime continues to be in line with the international standard.
Findings and conclusions in relation to effectiveness in practice
The detailed findings and conclusions in relation to effectiveness in practice of AEOI for Singapore are below, organised per Core Requirement (CR) and then per sub-requirement (SR) as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Effectiveness in practice: Jurisdictions should ensure that in practice Reporting Financial Institutions correctly implement the due diligence and reporting procedures, which includes a requirement for jurisdictions to have in place an administrative framework to ensure the effective implementation of the CRS.
Singapore’s implementation of the AEOI Standard is on track with respect to ensuring that Reporting Financial Institutions are correctly conducting the due diligence and reporting procedures and are therefore reporting complete and accurate information. This includes ensuring effectiveness in a domestic context, such as through having an effective administrative compliance framework and related procedures (SR 1.5), and collaborating with exchange partners to ensure effectiveness (SR 1.6). Singapore is encouraged to continue its implementation process to ensure its ongoing effectiveness.
SR 1.5 Jurisdictions should ensure that in practice Reporting Financial Institutions identify the Financial Accounts they maintain, identify the Reportable Accounts among those Financial Accounts, as well as their Account Holders, and where relevant Controlling Persons, by correctly conducting the due diligence procedures and collect and report the required information with respect to each Reportable Account. This includes having in place:
an effective administrative compliance framework to ensure the effective implementation of, and compliance with, the CRS. This framework should:
be based on a strategy that facilitates compliance by Reporting Financial Institutions and which is informed by a risk assessment in respect of the effective implementation of the CRS that takes into account relevant information sources (including third party sources);
include procedures to ensure that Financial Institutions correctly apply the definitions of Reporting Financial Institutions and Non-Reporting Financial Institutions;
include procedures to periodically verify Reporting Financial Institutions’ compliance, conducted by authorities that have adequate powers with respect to the reviewed Reporting Financial Institutions, with procedures to access the records they maintain; and
effective procedures to ensure that Financial Institutions, persons or intermediaries do not circumvent the due diligence and reporting procedures;
effective enforcement mechanisms to address non-compliance by Reporting Financial Institutions;
strong measures to ensure that valid self-certifications are always obtained for New Accounts;
effective procedures to ensure that each, or each type of, jurisdiction-specific Non-Reporting Financial Institution and Excluded Account continue to present a low risk of being used to evade tax; and
effective procedures to follow up with a Reporting Financial Institution when undocumented accounts are reported in order to establish the reasons why such information is being reported.
In order to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, Singapore implemented all of the requirements in accordance with expectations. The key findings were as follows:
Singapore implemented an overarching strategy to ensure compliance with the AEOI Standard developed after conducting a risk assessment that took into account a range of relevant information sources, such as scanning and profiling Financial Institutions, the identification of risks through daily operations and compliance activities and feedback from treaty partners. Singapore’s compliance strategy facilitates compliance and incorporates a credible approach to enforcement. Singapore intends to keep its compliance strategy and risk assessment under review to ensure its effectiveness on an ongoing basis.
Singapore has worked effectively to understand its population of Financial Institutions, including relevant non-regulated entities, utilising various relevant information sources, such as the Foreign Financial Institution list for FATCA purposes, the IRAS registered entities list and industry listings obtained from Accounting & Corporate Regulatory Authority and MAS. Singapore takes action to ensure that Reporting Financial Institutions are classifying themselves correctly under its domestic rules and reporting information as required. Singapore intends to keep its understanding of its Financial Institution population up to date on a routine basis.
The IRAS, as the institution responsible for implementing Singapore’s compliance strategy, appears to have the necessary powers and resources to discharge its functions. With respect to resourcing, Singapore has assigned the equivalent of 10 full time staff to monitor and ensure compliance by Reporting Financial Institutions, which are supported by other IRAS teams (the legal division on legislative matters and central teams of data analysts, IT specialists and enforcement specialists). The full time IRAS staff assigned to overseeing the AEOI Standard, as supported by other teams, have access to IT systems and tools to conduct risk assessments.
Singapore has conducted compliance activities, including onsite and desk-based checks to verify whether the information being reported is complete and accurate. Overall, they appear to have effectively implemented an operational plan to verify compliance with the requirements, incorporating appropriate compliance activities.
It appears that Singapore effectively enforces the requirements, including through the inspection of records of Reporting Financial Institutions and the application of dissuasive penalties and sanctions for non-compliance. It also appears that Singapore is ready to take effective action to address circumvention of the requirements if such circumvention is detected. It was noted that Singapore has taken effective action to ensure self-certifications are obtained as required and effectively follows up on undocumented accounts.
Singapore will also keep its jurisdiction-specific lists of Non-Reporting Financial Institutions and Excluded Accounts under review to ensure they continue to pose a low risk of being used for tax evasion purposes.
Table 3 provides a summary of the specific activities undertaken, or that are planned to be undertaken, in relation to each of the key parts of the framework described above.
In terms of the Financial Account information collected and sent by Singapore, it was found to include a lower proportion of Tax Identification Numbers with respect to the individuals associated with the accounts when compared to most other jurisdictions. This is a key data point for exchange partners to effectively utilise the information. The presence of dates of birth appeared to be in line with most other jurisdictions, as did the level of undocumented accounts.
Feedback from some of Singapore’s exchange partners indicated that, compared to what they generally experience when seeking to match information received from their exchange partners with their taxpayer database, they achieved a relatively lower level of success when seeking to match information received from Singapore. Furthermore, four exchange partners highlighted issues with respect to the information received, such as the absence of names, dates of birth, addresses or invalid TINs. Follow-up discussions confirmed that Singapore is aware of these issues and is seeking to improve the situation. More generally, Singapore has reached out to all of its partners experiencing relatively low matching rates to better understand their matching algorithms and the issues encountered so as to work with these partners on possible solutions to improve the matching rates. Exchange partners have reported a good level of cooperation with Singapore to address the issues raised.
Based on these findings it was concluded that, overall, Singapore is meeting expectations in ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, including by having in place the required administrative compliance framework and related procedures. It was also noted that there is room for improvement with respect to the issues identified by its exchange partners. Singapore is therefore encouraged to continue its implementation process accordingly, including by addressing the recommendation made.
Singapore should continue to address the issues raised by its exchange partners.
SR 1.6 Jurisdictions should collaborate on compliance and enforcement. This requires jurisdictions to:
use all appropriate measures available under the jurisdiction’s domestic law to address errors or non-compliance notified to the jurisdiction by an exchange partner; and
have in place effective procedures to notify an exchange partner of errors that may have led to incomplete or incorrect information reporting or non-compliance with the due diligence or reporting procedures by a Reporting Financial Institution in the jurisdiction of the exchange partner.
In order to collaborate on compliance and enforcement, it appears that Singapore implemented all of the requirements in relation to issues notified to them (i.e. under Section 4 of the MCAA or equivalent) in accordance with expectations. While no such notifications have yet been received, Singapore has the necessary systems and procedures to process them as required. It also appears that Singapore will notify its partners effectively of errors or suspected non-compliance it identifies when utilising the information received.
Based on these findings it was concluded that Singapore is fully meeting expectations in relation to collaborating with its exchange partners to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures. Singapore is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
CR2 Effectiveness in practice: Jurisdictions should exchange the information effectively in practice, in a timely manner, including by sorting, preparing, validating and transmitting it in accordance with the AEOI Standard.
Singapore’s implementation of the AEOI Standard is on track with respect to exchanging the information effectively in practice, including in relation to sorting, preparing and validating the information (SR 2.4), correctly transmitting the information in a timely manner (SRs 2.5 – 2.8) and providing corrections, amendments or additions to the information (SR 2.9). Singapore is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
SR 2.4 Jurisdictions should sort, prepare and validate the information in accordance with the CRS XML Schema and the associated requirements in the CRS XML Schema User Guide and the File Error and Correction-related validations in the Status Message User Guide (i.e. the 50000 and 80000 range).
One exchange partner highlighted a particular issue with respect to preparation and format of the information sent by Singapore. This related to a rejection of a data file. Singapore contacted the partner and the matter has been resolved. More generally, three (or 4%) of Singapore’s exchange partners reported rejecting more than 25% of the files received, of which one reported rejecting more than 50% of files received, due to the technical requirements not being met. This is broadly in line with the general experience of other jurisdictions. It was noted that Singapore has already successfully addressed all of the issues.
Based on these findings it was concluded that Singapore is fully meeting expectations in relation to sorting, preparing and validating the information. Singapore is therefore encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
SR 2.5 Jurisdictions should agree and use, with each exchange partner, transmission methods that meet appropriate minimum standards to ensure the confidentiality and integrity of the data throughout the transmission, including its encryption to a minimum secure standard.
In order to put in place an agreed transmission method that meets appropriate minimum standards in confidentiality, integrity of the data and encryption for use with each of its exchange partners, Singapore linked to the CTS.
Based on these findings it was concluded that Singapore is fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its partners. Singapore is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.6 Jurisdictions should carry out all exchanges annually within nine months of the end of the calendar year to which the information relates.
Feedback from Singapore’s exchange partners did not raise any concerns with respect to timeliness of the exchanges by Singapore and therefore with respect to Singapore’s implementation of this requirement.
Based on these findings it was concluded that Singapore is fully meeting expectations in relation to exchanging the information in a timely manner. Singapore is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.7 Jurisdictions should send the information in accordance with the agreed transmission methods and encryption standards.
Feedback from Singapore’s exchange partners did not raise any concerns with respect to Singapore’s use of the agreed transmission methods and therefore with Singapore’s implementation of this requirement.
Based on these findings it was concluded that Singapore is fully meeting expectations in relation to sending the information in accordance with the agreed transmission methods and encryption standards. Singapore is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.8 Jurisdictions should have the systems in place to receive information and, once it has been received, should send a status message to the sending jurisdictions in accordance with the CRS Status Message XML Schema and the related User Guide.
Feedback from Singapore’s exchange partners did not raise any concerns with respect to Singapore’s receipt of the information and therefore with Singapore’s implementation of these requirements.
Based on these findings it was concluded that Singapore is fully meeting expectations in relation to the receipt of the information. Singapore is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.9 Jurisdictions should respond to a notification from an exchange partner as referred to in Section 4 of the Model CAA (which may include Status Messages) in accordance with the timelines set out in the Commentary to Section 4 of the Model CAA. In all other cases, jurisdictions should send corrected, amended or additional information received from a Reporting Financial Institution as soon as possible after it has been received.
Singapore appears ready to respond to notifications and to provide corrected, amended or additional information in a timely manner and no such concerns were raised by Singapore’s exchange partners and therefore with respect to Singapore’s implementation of these requirements.
Based on these findings it was concluded that Singapore appears to be meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information. Singapore is encouraged to continue to ensure the ongoing effectiveness of its implementation.
Assessed jurisdiction’s comments on the assessment of effectiveness in practice
The Singapore delegation expresses its appreciation for the thorough exercise of the Assessment Panel in reviewing Singapore’s implementation of the AEOI Standard.
We are pleased that this review found Singapore’s implementation to be on track as a whole, with respect to the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice. This review affirms the robustness of Singapore’s AEOI regime and validated the many initiatives undertaken by Singapore to ensure effective implementation of the AEOI Standard in practice. Singapore remains fully committed to the AEOI standard and will continue to ensure our AEOI processes remain effective in accordance with the standard.
We note the specific recommendation made in SR 1.5 for Singapore to continue to address the issues raised by its exchange partners. As informed in the report, we have reached out to all exchange partners that reported low matching rate since being informed of their peer inputs. We will continue to work with our exchange partners on possible solutions to improve their matching rates. We wish to reiterate that resolution of such issues requires a collaborative approach, including exchange partners sharing with us the specific nature of issues they encountered, the accounts for which matching needs improvement and the matching algorithms used. Without the collaboration of exchange partners, we would not be able to unilaterally resolve the issues.
In this regard, with respect to the recommendation, Singapore will continue to work with its exchange partners to address the issues raised by them.
Note
← 1. With Australia, Canada, Denmark, Estonia, Finland, Iceland, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Malta, the Netherlands, New Zealand, Norway, South Africa, Switzerland and the United Kingdom. At the request of eight jurisdictions, namely Australia, Canada, Estonia, Italy, Japan, Korea, the Netherlands and New Zealand, Singapore has also activated relationships under the CRS MCAA with them.