SINGAPORE - 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 (FATCA) by Singapore-based financial institutions.
The two countries have initialled a Model 1 IGA, and expect to sign the agreement in the second half of the year.
FATCA is a US law which targets non-compliance with tax laws by US individuals using overseas accounts. Under FATCA, all financial institutions outside of the US are required to regularly submit information on financial accounts held by US individuals to the US Internal Revenue Service (IRS).
Under the Model 1 IGA, Singapore-based financial institutions will report information on financial accounts held by US persons to the Inland Revenue Authority of Singapore (IRAS), which will in turn provide the information to the US IRS.
Transmitting this information through IRAS helps to ease the compliance burden for our financial institutions as their reporting obligations would be deemed met once they have transmitted the information to IRAS.
Singapore-based financial institutions will have until December 31 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.