News / Economy

Singapore Fights Image as Swiss Banker of Asia

FILE - Singapore's financial district
FILE - Singapore's financial district
— In a place that restricts everything from chewing gum to pungent durian fruit.  Singaporean authorities pride themselves in having a high bar for strict laws and a low crime rate to match. So they’ve been none too pleased by reports that tax dodgers, corrupt officials, and money launderers might be closing their Swiss bank accounts and moving funds to Singapore.
 
In response, the government is ramping up measures to battle this reputation as a tax haven. It is now negotiating a deal with the United States that requires banks in Singapore to share details of Americans’ offshore assets with the Internal Revenue Service. The United States just signed the so-called FATCA (Foreign Account Tax Compliance Act) with six other governments this month.
 
“There is no basis for the allegation that wealthy individuals can hide money and avoid taxes in Singapore,” a Ministry of Finance spokesperson told VOA.
 
FATCA would be part of broader efforts to improve transparency in banking. Singapore already has similar information-sharing pacts with Germany and the Organization for Economic Cooperation and Development club of mostly-rich countries. As of this year, it also will be easier to prosecute money launderers in Singapore and “obtain bank and trust information from financial institutions without having to seek a court order,” the finance ministry said.
 
But critics don’t believe that’s enough. John Christensen, director of the British research firm Tax Justice Network, said Singapore’s bilateral agreements require foreign governments to make individual requests for banking information. He said the information-sharing should be automatic, meaning that as soon as a UK citizen opens an account in Singapore, for example, authorities here will disclose it to the UK government.
 
“All the infrastructure is in place to encourage and facilitate tax evasion,” said Christensen, also a former economic adviser to the British Channel Island of Jersey, another hub of offshore banking.
 
Singapore boasts one of the world’s most stable governments and economies, friendly business regulations, competitive tax rates, and banking privacy. All of this attracts the super-rich from abroad.
 
“It’d be stupid for them not to take advantage of this -- but you have to do it legally,” said Joseph Cherian, director of National University of Singapore Business School’s Center for Asset Management Research and Investments.
 
People certainly are taking advantage. Compared with $50 billion in 2000, Singapore managed $550 billion worth of assets in 2011, according to WealthInsight, a London-based research firm. Of that figure, $450 billion were in offshore accounts. In other words, more than 80 percent of private accounts in Singapore belonged to foreigners.
 
WealthInsight expects the number will continue to balloon by 2020, when it said Singapore will take Switzerland’s top spot in wealth management.
 
The question is whether that wealth is legally gained and legally taxed. Christensen doesn’t think it is. His group releases a Financial Secrecy Index every two years. Singapore ranked number five on the list published in November, compared with sixth place in 2011. Christensen said banking is so opaque that officials can’t prove financial assets are clean.
 
“It’s pure assertion on their part,” he said. “We know that the vast majority who use offshore accounts are using them for tax evasion.”
 
Alan Lau disagrees. He said that in his experience as head of financial services tax at KPMG Singapore, an accounting firm, most money flows into Singapore through legitimate channels.
 
“Whilst there may always be a risk or temptation for a small minority to attempt parking their ill-gotten wealth in a banking secrecy jurisdiction such as Singapore, the recent tightening noose on money laundering here has made it increasingly difficult for this to happen,” Lau said.
 
He added that the crackdown on illicit wealth “has caused a certain level of stress and anxiety for the private banking sector,” to ensure it complies with new regulations.
 
Similarly, Cherian said the push for compliance is evident in the mountains of new paperwork for account holders in the past six months. He said the government’s actions reflect Singapore’s obsession with keeping a squeaky clean image.
 
“It’s the most law-abiding city in the world,” Cherian said. “They don’t want to be seen as a cowboy, wild-wild-west kind of place.”
 
Some argue there is nothing wrong with individuals and multinational corporations flocking to tax-friendly jurisdictions, as long as it’s done above board. Eduardo Saverin, a Facebook co-founder, famously renounced his US citizenship in 2011 after relocating to Singapore, a move widely seen as driven by the low taxes here. But others argue that when governments push down tax rates to attract business, they force other countries into a race to the bottom.
 
Even if tax avoidance is legal, it could be harmful. Christensen said that when the rich use their wealth to find ways to pay fewer taxes, they transfer the burden to lower income brackets to fill the tax gap.
 
“We don’t make this distinction between evasion and avoidance, because it’s abuse,” he said.
 
In recent years, global wealth has shifted to Asia, especially to Singapore and Hong Kong, partly because of the new, far tougher scrutiny on traditional tax havens like Switzerland and Bermuda. But if Singaporean authorities are seriously clamping down, too, then private wealth could be on the move again.

You May Like

At Khmer Rouge Court, Long-Awaited Verdict Approaches

First phase of trial, which is coming to an end, has focused on forced exodus of Phnom Penh in 1975 - and now many are hopeful justice will be served More

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities More

Video Information War Rages Alongside Real One in Ukraine

Downing of Malaysian airliner, allegations of cross-border shelling move information war in war-torn country to a new level More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Information War Rages Alongside Real One in Ukrainei
X
Al Pessin
July 31, 2014 8:13 PM
The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video Information War Rages Alongside Real One in Ukraine

The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict in Gaza, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities. Probably the most important destination is the local bakery. VOA’s Scott Bobb reports from Gaza City.
Video

Video US-Funded Program Offers Honduran Children Alternative to Illegal Immigration

President Obama and Central American leaders recently agreed to come up with a plan to address poverty and crime in the region that is fueling the surge of young migrants trying to illegally enter the United States. VOA’s Brian Padden looks at one such program in Honduras - funded in part by the United States - which gives street kids not only food and safety but a chance for a better life without, crossing the border.
Video

Video 'Fab Lab' Igniting Revolution in Kenya

The University of Nairobi’s Science and Technology Park is banking on 3-D prototyping to spark a manufacturing revolution in the country. Lenny Ruvaga has more for from Nairobi's so-called “FabLab” for VOA.
Video

Video Gazans in Shelled School Sought Shelter

Israel's air and ground assault against Hamas-led fighters in Gaza has forced many Palestinians to flee their homes, seeking safety. But safe places are hard to find, as VOA’s Scott Bobb reports from Jabaliya.
Video

Video Rapid Spread of Ebola in West Africa Prompts Global Alert

Across West Africa, health officials are struggling to keep up with what the World Health Organization describes as the worst ebola outbreak on record. The virus has killed hundreds of people this year. U.S. President Barack Obama and other world leaders are watching the developments closely as they weigh what actions, if any, are needed to help contain the disease.
Video

Video Michelle Obama: Young Africans Need to Embrace Women's Rights

U.S. first lady Michelle Obama urged some of Africa's best and brightest to advocate for women's rights in their home countries. As VOA's Pam Dockins explains, Obama spoke to some 500 participants of the Young African Leaders Initiative, a six-week U.S.-based training and development program.
Video

Video Immigrant Influx on Texas Border Heats Up Political Debate

Immigrants from Central America continue to cross the U.S.-Mexico border in south Texas, seeking asylum in the United States, as officials grapple with ways to deal with the problem and provide shelter for thousands of minors among the illegal border crossers. As VOA's Greg Flakus reports from Houston, the issue is complicated by internal U.S. politics and U.S. relations with the troubled nations that immigrants are fleeing.
Video

Video Study: Latino Students Most Segregated in California

Even though legal school segregation ended in the United States 60 years ago, one study finds segregation still occurs in the U.S. based on income and race. The University of California Los Angeles Civil Rights Project finds that students in California are more segregated by race than ever before, especially Latinos. Elizabeth Lee reports for VOA from Los Angeles.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.