Agreement To Facilitate Compliance By Singapore Financial Institutions With US Tax Laws
FATCA is a US law which targets non-compliance with tax laws by US persons using overseas accounts. Under FATCA, all financial institutions outside of the US are required to regularly submit information on financial accounts held by US persons to the US Internal Revenue Service (IRS).
Under the Model 1 IGA, Singapore-based financial institutions will report information on financial accounts held by US persons to the Inland Revenue Authority of Singapore (IRAS), which will in turn provide the information to the US IRS. Transmitting this information through IRAS helps to ease the compliance burden for our financial institutions1 as their reporting obligations would be deemed met once they have transmitted the information to IRAS.
Following the initialling of the IGA, the parties expect to sign the agreement in the second half of 2014. Singapore-based financial institutions will have until 31 December 2014 to register as a Foreign Financial Institution within a Model 1 IGA jurisdiction and obtain a Global Intermediary Identification Number at the US IRS’ online FATCA registration portal2. This will ensure that there is no FATCA-related withholding tax on payments made to them from the US.