On 6 May 2014, the Monetary Authority of Singapore (the "MAS") issued a press release stating that Singapore and the US have substantially concluded discussions on an Intergovernmental Agreement ("IGA") that will facilitate compliance with the US Foreign Account Tax Compliance Act (the "FATCA") by Singapore-based financial institutions ("FIs").
The FATCA affects FIs worldwide and requires those outside of the US to submit information on financial accounts held by US persons to the US Internal Revenue Service (the "IRS") on a regular basis. FIs that fail to comply will face a 30% FATCA-related withholding tax on certain payments made from the US to them.
Singapore has initialled a Model 1 IGA with the US and has been included on 5 May 2014 in the US Treasury's list of jurisdictions that are treated as having an IGA in effect. The Singapore-US IGA is expected to be signed in the second half of 2014 and will be published on the Inland Revenue Authority of Singapore's (the "IRAS") website thereafter.
Under the Model 1 IGA, Singapore-based FIs will report information on financial accounts held by US persons to the IRAS, which will in turn provide the information to the US IRS. Once the FIs have transmitted the information to IRAS, their reporting obligations would be deemed met.
Singapore-based FI's 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 portal. This will ensure that there is no FATCA-related withholding tax on payments made to them from the US.
Singapore-based FIs can now register at the FATCA Registration Portal.