- Singapore signs its first Competent Authority Agreement under the OECD Common Reporting Standard, with Australia.
- Once the agreement is ratified, the Inland Revenue Authority of Singapore and the Australian Taxation Office will exchange account information from September 2018 about:
- Singaporean residents holding financial accounts with Australian financial institutions; and
- Australian residents holding financial accounts with Singaporean financial institutions.
- Singaporean and Australian financial institutions should update their account documentation, systems and processes in preparation for compliance with the OECD Common Reporting Standard in 2017.
Bilateral Competent Authority Agreement
On 6 September 2016, Australia and Singapore signed the Agreement between the Competent Authorities of Singapore and Australia on the Automatic Exchange of Financial Account Information to Improve International Tax Compliance to enable the exchange of information under the OECD Common Reporting Standard (CRS) between themselves.
Once the agreement is ratified, this means that from September 2018 the Inland Revenue Authority of Singapore and the Australian Taxation Office will exchange financial account information of residents in the other country.
The commencement date for CRS is fast approaching.
The due diligence obligations supporting the reporting and exchange of such information will commence on:
- 1 January 2017 for Singaporean financial institutions; and
- 1 July 2017 for Australian financial institutions.
Unlike Australia, Singapore is not a signatory to the Multilateral Competent Authority Agreement, which provides for the automatic exchange of financial account information on a multilateral basis (there are currently more than 80 countries that are signatories). Instead, Singapore approaches exchange of information on a bilateral basis. While the Competent Authority Agreement with Australia is Singapore’s first, we expect Singapore will conclude agreements with more jurisdictions shortly.
What do financial institutions need to do?
Australian and Singaporean financial institutions should ensure that they are prepared for the start of CRS due diligence and onboarding process obligations in 2017. CRS is similar to FATCA but its reach is wider and there are important differences in application.
Financial institutions need to determine whether they are characterised as “Reporting Financial Institutions” under the CRS, and should start the process of adapting their systems and updating their account documentation (terms and conditions, application forms, disclosure documents) to ensure they can meet the due diligence and reporting requirements.