On 13 November 2018, Singapore and the US signed a Tax Information Exchange Agreement (TIEA). Singapore also signed the reciprocal Foreign Account Tax Compliance Act Model 1 Intergovernmental Agreement (FATCA IGA) with the US. Please click here for our client alert on the FATCA IGA.

The TIEA allows the competent authorities of Singapore and the US to request for and exchange information that is “foreseeably relevant” to the administration and enforcement of domestic tax laws. It also sets out the scope of information that can be exchanged, procedure to follow, as well as the limitations on the exchange of information.

At a high level, the TIEA targets the exchange of information that is held by the authorities of either Singapore or the US, or that is in the possession or control of persons within the territorial jurisdiction of either Singapore or the US. The scope is broad and could potentially impact entities within the same multinational enterprise, financial institutions and any third party which has information that is "foreseeably relevant" (e.g., third-party suppliers or customers of a taxpayer in either Singapore or the US).

If a competent authority has insufficient information to comply with a request, the TIEA compels it to “use all relevant information gathering measures” to provide the requested information.

The TIEA sets out the detailed procedure on the manner in which an applicant party may request for information from a requested party. It also facilitates automatic exchange of information, as well as spontaneous exchange of information (further details have yet to be agreed upon).

A key aspect of the TIEA that is worth mentioning is the possibility of declining an information request. For example, a requested party is not required to obtain or provide information to the applicant party, if it is not able to obtain such information under domestic law. Another example would be information from communications between a client and attorney etc. that is (i) protected by legal advice privilege, or (ii) produced for the purposes of use in existing or contemplated legal proceedings.

The TIEA will enter into force one month after written notice is provided by Singapore that it has completed its internal procedures for entry into force.

What this means for you

The scope of the TIEA casts a wide net over information that may be exchanged under the TIEA. Persons in possession or control of information should be mindful of the scope of the TIEA. Equally, the limitations of the TIEA and avenues to reject requests for the exchange of information are relevant and such persons should be aware of their rights and obligations when a request is made by a competent authority to exchange information.

More generally, the TIEA is consistent with Singapore's efforts in ensuring transparency in its international tax policy. Coupled together with country-bycountry reporting and spontaneous exchange of rulings and incentives, taxpayers should undertake a holistic review of their supply or value chains to identify risk areas and mitigation solutions.

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