An agreement to help crack down on cross-border tax evasion is being worked on by Singapore and Indonesia.
The two nations are working on implementing the framework for the automatic exchange of information (AEOI) on tax matters, as they look to keep improving trade and investment ties.
The move was highlighted during a meeting between Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam and Indonesian Finance Minister Bambang Brodjonegoro on Monday.
The AEOI is a new standard developed by the Organisation for Economic Cooperation and Development.
It entails periodic and systemic transmission of taxpayer information in bulk to enable more timely action against tax evasion. The existing international standard exchanges information only upon request.
Indonesia will implement AEOI by 2017, followed by Singapore a year later, but Singapore wants to make sure there is ample protection for confidentiality as well as reciprocity in data swop, Singapore's Ministry of Finance (MOF) said in a statement yesterday.
"AEOI needs to be done within a robust framework of law to protect taxpayer confidentiality and ensure that the information is used properly," MOF said. "There must also be reciprocity with any future AEOI partners in terms of information exchange."
Ahead of AEOI, both nations will work on updating the Avoidance of Double Taxation Agreement to incorporate the current standard on information exchange upon request, MOF added.
Meanwhile, Singapore's immediate priority is to implement the Foreign Account Tax Compliance Act (Fatca) agreement with the United States, MOF stressed.
The US enacted Fatca in 2010 to crack down on non-compliance with US tax laws by citizens using foreign accounts.
Singapore and the US formalised their agreement to implement Fatca on Dec 9 this year after negotiations since last year.
This article was first published on Dec 17, 2014.
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