Financial Times: Singapore acts on bank secrecy laws

Singapore promised on Friday to relax its strict bank secrecy laws in a sign of the escalating international pressure on tax evasion.

Hong Kong decided to bring its tax transparency up to international standards, and both moves advance the campaign against tax havens.

John Withers, deputy chairman of Step Worldwide, a professional body for wealth advisers, said: “If Singapore is moving in that direction it narrows down the places to which undisclosed money can easily be banked and it puts pressure on Switzerland to follow suit. It is the beginning of the end of bank secrecy.”

The moves came as the US administration endorsed a bill targeting tax havens. Tim Geithner, US Treasury secretary, promised a “much more ambitious effort to deal with offshore tax havens”.

Singapore’s concession is a big shift for a city-state accused of marketing itself as the “ultimate secrecy jurisdiction” by the Organisation for Economic Co-operation and Development at a US Senate hearing in 2007.

Singapore’s finance ministry said it would amend its bank secrecy laws in mid-2009 to take account of the OECD’s standards on exchange of information. “Once the legislative amendments are passed in parliament, Singapore is prepared to negotiate and conclude double taxation agreements that will enable us to provide further assistance for exchange of information.”

It said: “The decision . . . is in keeping with Singapore’s role as a trusted centre for finance and a responsible jurisdiction, with strong and consistent regulatory policies and a firm commitment to the rule of law.”

The promised changes will allow foreign tax authorities to request information about suspected tax evaders, although Singapore said “information fishing” would not be allowed and there would be confidentiality and privacy safeguards, as allowed under OECD rules.

Even so, its announcement will be applauded by other offshore centres that have lost business to Singapore.

Lee Kuan Yew, modern Singapore’s founding father, told bankers the city-state could not escape the pressure being applied to Switzerland. “We must move with the flow,” he said.

Last week, John Tsang, Hong Kong’s financial secretary, announced plans to legislate by mid-year to bring its tax information exchange provisions to international standards. “I believe that the business and professional community generally agrees that Hong Kong should align its arrangements for the exchange of tax information with international standards so that we can enter into such agreements with more economies.”

Singapore and Hong Kong are among 34 secrecy jurisdictions listed in the anti-tax haven bills introduced in the US Congress this week.