Singapore Signs MCAAs to Enhance Tax Co-operation on Exchange of Information

PRESS RELEASE BY MINISTRY OF FINANCE, SINGAPORE

On 21 June 2017, Singapore will sign the Multilateral Competent Authority Agreements (“MCAAs”) on:

• the Automatic Exchange of Financial Account Information under the Common Reporting Standard (“CRS”); and
• the Exchange of Country-by-Country (“CbC”) Reports.

Both agreements will be signed in the Netherlands by Mrs Chia-Tern Huey Min, Singapore’s Deputy Commissioner for International, Investigation and Indirect Taxes Group of the Inland Revenue Authority of Singapore.

The signing of both MCAAs reaffirms Singapore’s commitment to the international standards on tax cooperation. The MCAAs have gained recognition as multilateral framework agreements for bilateral cooperation on Automatic Exchange of Information (“AEOI”). Under the MCAAs, AEOI relationships remain bilateral – signatories to the MCAA enter into AEOI on a bilateral basis with another signatory on a mutual consent basis.

With the signing of the MCAAs, Singapore will continue to abide by the principles for establishing bilateral AEOI relationships for both CRS and CbCR. For both MCAAs, the principles are as follows:

1. The AEOI partner has the safeguards needed to ensure the confidentiality of information exchanged and prevent its unauthorised use; and
2. There is full reciprocity with the AEOI partner in terms of information exchanged.

In the case of CRS, Singapore will also want to ensure that there is a level playing field among all major financial centres. Singapore will consider engaging in automatic exchange of financial account information with regional jurisdictions which have the safeguards to ensure the confidentiality of information exchanged, and have similar agreements in place with relevant financial centres, including Hong Kong and Switzerland.

In the case of CbCR, signing the MCAA will enable Singapore to efficiently establish a wide network of exchange relationships for the automatic exchange of CbC Reports.

Minister for Finance, Mr Heng Swee Keat, said: “As a business and financial hub, Singapore has earned a high level of trust and confidence. We take our commitment to international standards on tax cooperation seriously. Signing both MCAAs will allow Singapore to implement the international standards with our bilateral AEOI partners in an effective and efficient way.”

Explanatory Notes & Details

Multilateral Competent Authority Agreement (“MCAA”)

The MCAA is a multilateral framework agreement that provides a standardised and efficient mechanism to facilitate the automatic exchange of information. It avoids the need for several bilateral agreements to be concluded. Its design as a framework agreement means the MCAA always ensures each signatory has ultimate control over exactly which exchange relationships it enters into and that each signatory’s standards on confidentiality, data protection and appropriate use of information always apply.

Automatic Exchange of Information (“AEOI”)

AEOI entails systematic and regular (such as annual) transmission of taxpayer information.

Standard for Automatic Exchange of Financial Account Information (also known as the Common Reporting Standard (“CRS”))
The CRS is an internationally agreed standard for the automatic exchange of financial account information, endorsed by OECD and the Global Forum for Transparency and Exchange of Information for Tax Purposes (“GF”). The CRS sets out the financial account information to be exchanged, the financial institutions (“FIs”) required to report, the different types of accounts and taxpayers covered, as well as the customer due diligence procedures to be followed by FIs.

Exchange of Country-by-Country (“CbC”) Reports

CbCR is a form of reporting by multinational enterprises (“MNEs”), initiated by the Organisation for Economic Co-Operation and Development (“OECD”) in the Base Erosion and Profit Shifting (“BEPS”) Action 13 Report. Singapore-headquartered MNEs with consolidated group revenue of at least $1,125 million are required to prepare and file CbC reports to IRAS for financial years beginning on or after 1 January 2017. CbC reports submitted to IRAS will be provided to tax authorities of countries with which Singapore has established bilateral AEOI relationships. The Country-by-Country Report may be used for high-level transfer pricing risk assessment purposes, and may also be used by tax administrations in evaluating other BEPS related risks and where appropriate for economic and statistical analysis. However, the information in the Country-by-Country Report should not be used as a substitute for a detailed transfer pricing analysis of individual transactions and prices based on a full functional analysis and a full comparability analysis. The information in the Country-by-Country Report on its own does not constitute conclusive evidence that transfer prices are or are not appropriate. It should not be used by tax administrations to propose transfer pricing adjustments based on a global formulary apportionment of income.