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Follow on Google News | FATCA and the Singapore CompanyFATCA - The Foreign Account Tax Compliance Act may have a decided impact on Singaporean companies that have US corporate or individual shareholding.
By: Servolve Pte.Ltd. What is the impact of FATCA on Singapore registered companies? Service providers across the nation should be alert if a Singapore registered entity (company, partnership firms, sole proprietorship) 1. Financial (deposit and custodial) accounts held at foreign financial institutions – this includes personal accounts held by U.S.tax payers 2. Foreign stock or securities not held in a financial account 3. Foreign partnership interests 4. Foreign mutual funds 5. Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor (IRS note - Yes, as to both foreign accounts and foreign non-account investment assets) 6. Foreign hedge funds and foreign private equity funds (Note – Filing requirements under Form 8938 is over and above the requirements laid under Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR) There has been substantial resistance from Singapore based financial institutions due to the impact it may have on their operations. US requires Foreign Financial Institutes (FFIs) that have dealings with US tax payers to enter into a mutual agreement with the US government, this means increased documentation, due diligence and compliance obligations for these financial institutes. This would inevitably increase operating costs for these institutes. Starting January 1, 2013, those financial institutes which are under agreements with the US would be spending substantially more amount of time and effort for opening and operating bank accounts for US tax payers in Singapore. This is regardless of the fact whether this is a personal or a corporate bank account. A Singapore based consultation firm – Servolve, pointed out in this context that Singapore bank account opening procedures for US tax payers as well as entities that have a predominantly US shareholding is likely to entail more time from the year 2013. On an average it takes about three weeks to open a Singapore bank account complete with online banking facilities. It is expected that despite the initial resistance, banks may voluntarily enter into an agreement with the US, to avoid payment of 30 percent withholding tax on certain US - sourced income received by these institutes. Singapore enjoys considerable preference for formation of holding companies as the country enjoys substantially lower taxes when compared with the rest of the developed world. This state of affairs could undergo a change in the future as the FATCA considers private equity funds as “Foreign Financial Institute”, hence this might entail higher due diligence procedures for service providers who help set up the same. The full impact of FATCA for Singapore can be felt only once the obligations for filing and reporting begin in the early part of 2013. However it is suggested that all related industry players – whether suppliers, financial institutes or service providers gear up for a sea change. Source - TODAY Online - FATCA and your company by by Michael Brevetta and Jessie Chew dated 10/09/2012 Foreign Account Tax Compliance Act (FATCA) - the salient features and explanations sourced in this article has been taken from www.irs.gov - bare act End
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