Singapore’s attractiveness as a low-tax bolt hole has been gathering headlines in Australia thanks to stories that Gina Rinehart and Nathan Tinkler have bought property in the foreigners-only enclave of the Sentosa Cove project. Singapore famously doesn’t have a capital gains or inheritance tax and personal tax is at a 20% top rate against 46.5% in Australia (plus the Medibank levy). Sounds like heaven on a stick for the rich.
Those attractions have contributed to the rise in stories about rich foreigners fleeing their homelands to relocate in Singapore (much as rich Poms in banks and finance fled the UK for Switzerland several years ago, only to find their expensive move was undone by a change of government and the realisation that Orson Welles was right in The Third Man about cuckoo clocks and Switzerland). Singapore’s high secrecy levels on bank accounts and associated transactions has been especially appealing to more and more rich people as Switzerland has whittled away its strict secrecy laws under pressure from Germany, the US and OECD, and Lichtenstein has been cracked by hackers purloining data and selling it to tax authorities around the world.
But it would now seem that anyone who moved to Singapore or set up an account or other arrangements in the country to take advantage will have to think again. The Singapore government and its conservative but ferocious central bank, the Monetary Authority of Singapore (MAS), have made it clear the attractions of the island state do not go as far as Switzerland in facilitating tax avoidance and money laundering.
In other words, moving to Singapore to wash or hide black money is out, as is the under-declaration of tax in another country and the transferring of the proceeds or untaxed amount to a Singapore financial institution. (And that includes those who might try and wash money through the mega casino, also on Sentosa).
Last week, the MAS told the island state’s banks that it would heavily penalise anyone that facilitated tax evasion, designating tax crimes as a money laundering “predicate offences”, making it illegal for a bank to assist tax evaders in hiding funds. The MAS said this was designed to “discourage the entry of tax evasion monies into our financial system and protect Singapore’s reputation as a trusted financial centre”. The new rules will apply to new and existing accounts.
And banks, financial groups and others can’t claim ignorance as a defence, as the MAS made clear in its circular:
“[Financial institutions] will need to understand a client’s tax-risk profile and apply customer due diligence, transactions monitoring and control measures that are commensurate with the assessed risks, to effectively detect and deter the laundering of proceeds from serious tax offences through the financial system.”
And to make that latter point very clear, Singapore on Sunday signed a deal with Germany to share information that will help Berlin detect potential tax dodgers and avoiders using Singapore as a hideaway. Under the deal, both counties may exchange information for the enforcement of the domestic tax laws “of the requesting country”, expanding this beyond taxes on income and capital. Nor will the exchange depend on the taxpayer being resident in either country.
Australia has around A$1.3 trillion in our superannuation system, as well as hundreds of billions in other managed accounts independent of the retirement savings system.
Maybe, but there is some speaking out of the side of their mouth. Here is what Fairfax’s Hamish MacDonald wrote in February this year:
[US-based credit cards such as Amex and Visa are, strictly speaking, not usable in Burma because of Washington’s financial sanctions. Still, when the Herald’s $US100 bills were deemed too creased and discoloured at our Rangoon hotel last week, an Amex card was grudgingly accepted.
A day after a form was filled in with the card details, the hotel bill in US dollars and signed, another Amex printout arrived, converted into Singapore dollars, plus a healthy margin, and bearing the imprint of the DBS Bank, one of Singapore’s major commercial banks.
Thus are sanctions circumvented, not without a large surcharge taken by the sanction breaker. The role of Singapore’s banks in weakening US sanctions cannot be unknown to the US Treasury, but presumably Singapore is too loyal a strategic ally to Washington for its banks to be cut off from the heart of the global financial system.]
When Singapore signs an agreement with Indonesia to supply names of their citizens using banking in Singapore to avoid tax we will know they are serious. Most of the black money comes from their poor neighbours. When Singapore was the honest man in Asia before their mad rust into casinos and hot money they stood out as an example, not any more.