New US tax law won't hurt Singapore's competitiveness: SMOS Josephine Teo

New US tax law won't hurt Singapore's competitiveness: SMOS Josephine Teo
Senior Minister of State for Finance and Transport Josephine Teo (above) said the cost of compliance with international tax laws is likely to go up as a result of new legislation coming out of the United States, but this should not affect Singapore's competitiveness as a financial hub.

The cost of compliance with international tax laws is likely to go up as a result of new legislation (United States' Foreign Account Tax Compliance Act) coming out of the United States, but this should not affect Singapore's competitiveness as a financial hub.


Get the full story from The Straits Times.

US issues final tax anti-evasion rules, enforcement ahead

WASHINGTON - Non-US pension funds and mutual funds were spared the full brunt of new US information-reporting rules on overseas accounts meant to catch Americans who dodge US taxes by keeping their assets offshore.

Chiefly targeting banks, the Foreign Account Tax Compliance Act (FATCA) rules, published by the US Treasury on Thursday, require foreign financial institutions with $50,000 of any American taxpayer's assets to report the holdings to the US Internal Revenue Service.

The Treasury rejected a request by businesses, banks and foreign investment funds to delay a January 2014 start date for big penalties imposed on individuals and financial firms that do not comply with the law.

The announcement completes the rule-writing process for FATCA, a law that Congress passed in March 2010 after a Swiss bank scandal revealed that US taxpayers had hidden millions of dollars overseas from the IRS.

Certain retirement funds, life insurance and other "low-risk" financial products held abroad, which are not considered havens for dodging taxes, are exempted from reporting their US account holders' information to the IRS. Financial firms and foreign governments had been calling for these exemptions.

The law, the first of its kind globally, has been decried by companies and US-ally countries as unilateral, over-reaching and a breach of privacy. US law requires that Americans pay taxes on their global income, not just domestic.

Treasury officials are hoping to sign up more than 50 countries with FATCA agreements and kick-start a dragnet of tax enforcement.

"The real story here is that looks like it is going to become a global model," Manal Corwin, deputy assistant Treasury secretary for international tax affairs, told Reuters in an interview.

Companies affected by the new rules, including BlackRock , Western Union and Prudential, may spend more than $100 million (S$122.3 million) each to comply with the law. Some firms are asking Treasury for additional time to prepare.

Financial institutions that refuse to comply with the law will be effectively shut out of US securities markets.

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