Singapore account holders must disclose tax residency status

Account holders in Singapore have been told by the taxman to fully cooperate with their financial institutions as they determine the tax residency status of their clients under the Common Reporting Standard (CRS).

Singapore account holders must disclose tax residency status

|

The Inland Revenue Authority of Singapore (Iras) warned account holders that failure to “respond to their [financial institutions’] requests to confirm their tax residency status” will result in them being treated “as tax residents in the respective foreign jurisdictions” in which their institutions believe them to reside.

Under CRS, account information would be passed to the tax authority in that jurisdiction, meaning the account holder could face double taxation.

Tax residency

An individual is deemed to be a tax resident if they are “physically present in Singapore for at least 183 days in the calendar year preceding the year of assessment” or if they “exercise an employment in Singapore for at least 183 days in the calendar year preceding the year of assessment”.

Iras stated: “Account holders should also inform their [financial institutions] of any change in circumstances, such as long-term job postings to a foreign jurisdictions, which may affect their tax residency status. Account holders are also reminded to ensure that all submissions to [financial institutions] are accurate.

“Deliberately providing false information to the [financial institutions] on an account holder’s tax residency status is an offence under the CRS law,” the tax authority said on Friday.

CRS

In effect since 1 January 2017, CRS requires banks, specified insurance companies, investment entities and custodial institutions to report the tax residency status of their account holders to Iras.

For accounts opened before 1 January 2017, financial institutions may contact the account holders to confirm their tax residency status if the institution holds information that indicates they could be foreign tax residents.

For new accounts opened on or after 1 January 2017, financial institutions will use a self-certification form, to be filled in by account holders, to collect tax residency information.

100+ jurisdictions

The change is not limited to Singapore, with more than 100 jurisdictions committed to implementing CRS by 2018, including Dubai, Hong Kong, and Switzerland.

The CRS is an internationally agreed standard for the automatic exchange of information (AEOI) on financial accounts between jurisdictions for tax purposes, with the objective of enhancing tax transparency to detect and deter tax evasion through the use of offshore bank accounts. 

MORE ARTICLES ON