Corporate & Securities
Public Consultation on Proposed Regulations to
Help Financial Institutions Comply with US
On 22 September 2014, the Ministry of Finance, the Monetary Authority of
Singapore and the Inland Revenue Authority of Singapore released the
following proposed regulations and guidance to help financial institutions in
Singapore comply with the US Foreign Account Tax Compliance Act
a. the draft Income Tax (International Tax Compliance Agreements)(United
States of America) Regulations 2014 (SG Regulations), which set out the
due diligence and reporting obligations of Singapore-based financial
institutions in relation to the FATCA; and
b. a draft FATCA e-Tax Guide (e-Tax Guide), which provides further
explanation of those obligations.
The public consultation period for the above proposed regulations and
guidance will end on 17 October 2014.
FATCA requires all financial institutions outside of the US to regularly submit
information on financial accounts held by US persons to the US Internal
Revenue Service, or face a 30% withholding tax on certain gross payments
received from the US.
To ease the FATCA compliance of financial institutions in Singapore,
Singapore has substantially concluded a Model 1 Intergovernmental
Agreement (IGA) with the US in May 2014. The IGA will be signed in the
fourth quarter of 2014.
Under the proposed SG Regulations, reporting Singapore-based financial
institutions (SGFIs) will be subject to the reporting obligations. SGFIs would
include licensed banks, merchant banks and finance companies, custodial
institutions, certain capital markets services licence holders, licensed insurers
and designated financial holding companies. Such SGFIs will be deemed
reporting SGFIs where they are (a) tax resident in, or incorporated, formed or
established under the laws of Singapore, but excludes any branch of the
financial institution located outside Singapore, or (b) a branch located in
Singapore of a financial institution that is not tax resident in, nor incorporated,
formed or established under the laws of Singapore.
Certain SGFIs are excluded from being a reporting SGFI, including financial
institutions with a local client base and local banks. Stringent criteria will need
to be met in order to fall within the non-reporting SGFI category.
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The e-Tax Guide proposes the following key implementation steps:
Reporting SGFIs have until 22 December 2014 to register themselves at the US IRS Online FATCA Registration Portal as FIs within a Model 1 IGA jurisdiction and obtain a Global Intermediary Identification Number (GIIN), to ensure inclusion on the US IRS FFI List by 1 January 2015. Reporting SGFIs are recommended to register by 22 November 2014 in order to have sufficient buffer time.
Applicable due diligence requirements
Different sets of due diligence procedures are set out in Section 9 of the e-Tax Guide for six types of accounts (dependant on whether it is an individual or non-individual account and whether the account is opened before or after 1 July 2014 (for individual account) or before or after 31 December 2014 (for non-individual account)).
The first reporting year is 2014. The deadline for information reporting to IRAS is 31 May annually starting from 2015, for reporting year 2014.
FATCA-related withholding tax on US source payments commenced globally on 1 July 2014. However, a SGFI complying with relevant Singapore legislations should not be subject to FATCA-related withholding as long as it registers as a FI operating in a Model 1 jurisdiction and is included in the US IRS FFI List by 1 January 2015.
Copies of the SG Regulations and the e-Tax Guide may be found at the following link: