May 14 (Bloomberg) -- Singapore is set to conclude an agreement with the U.S. that will help financial institutions based in the city-state comply with a tax rule requiring them to share information about overseas accounts held by Americans.
The island’s tax authority will also no longer need a court order to obtain bank and trust information requested by other nations, the Finance Ministry, central bank and Inland Revenue Authority of Singapore said in a joint statement today.
Wealthy individuals were hiding as much as $32 trillion offshore at the end of 2010, according to Tax Justice Network, a U.K.-based organization that campaigns for transparency in the financial system. Singapore, Asia’s biggest offshore private banking and wealth management hub, will make laundering of profits from tax evasion a crime on July 1.
“These changes we are now making are a major enhancement, in step with the strengthening of international standards for exchange of information,” Finance Minister Tharman Shanmugaratnam said in the statement. “There is no conflict between high standards of financial integrity and keeping our strengths as a center for managing wealth.”
Singapore will also increase the number of countries it is able to exchange information with for tax purposes from 41 to 83, the government said.
U.S. lawmakers passed legislation in 2010 to curb tax evasion by requiring financial institutions based outside the country to obtain and report information about income and interest payments accrued to the accounts of American clients.
Under the Foreign Account Tax Compliance Act, banks and account holders that don’t comply would face a withholding tax of as much as 30 percent. Rules for the legislation, known as Facta, were completed in January.
Singapore’s agreement with the U.S. will enable financial institutions in the city-state to pass information to local authorities, who will relay it to the U.S.