The Organisation for Economic Cooperation and Development (OECD) has lauded Singapore’s decision to strengthen its international tax cooperation framework.
Media reports cited Pascal Saint-Amans, director of OECD’s Centre for Tax Policy describing it as a “very significant move” to improve information exchange but will these new rules have a negative impact on the asset management industry in Singapore?
Analysts Channel NewsAsia spoke to describe the move as “pragmatic” in view of the changing financial landscape as countries around the world, especially in the West, take an increasingly tough position on tax crimes.
With the changes announced on Tuesday, they say Singapore will comply with global standards and avoid being labelled as a tax haven.
Commenting on the new rules, the Private Banking Industry Group said they “complement its ongoing work to protect Singapore’s reputation as a clean and efficient global financial centre by promoting best practices in the industry.”
Deutsche Bank’s head of asset & wealth management, Asia-Pacific, Ravi Raju, pointed out that the proposed changes are positive for the wealth management industry in Singapore and will contribute to tackling cross border tax offences and bringing down “regulatory arbitrage”.
The private banking industry has adopted a set of practices to detect and report illicit flows of money.
Singapore is the world’s fourth-largest offshore financial centre. With the new rules, there are concerns whether this will severely impede funds from coming into the country.
Analysts do not think the new ruling will be detrimental to Singapore.
They say many key financial centres, like Switzerland and Hong Kong operate on the same rules, so it is a fairly level playing field and Singapore is unlikely to be disadvantaged.
Second, there are real and compelling business opportunities in emerging Asia that will continue to encourage funds to flow into and through Singapore.
These new rules, they say, may not necessarily hurt Singapore’s attractiveness as an investment or wealth management destination.
Koh Ching Ching, head of group corporate communications at OCBC Bank said. “This strengthened framework reaffirms Singapore’s reputation as a financial centre with the highest standards of transparency and integrity. A strong Singapore brand is beneficial to a leading wealth management player such as OCBC, as we continue to grow the business.”
In fact, some analysts say having stricter rules could have some positive effect.
For instance, some businesses and financial institutions may see this as beneficial to their corporate reputation by operating in a country that meets international standards on tax fraud.
Market watchers say what this means is that banks will have to beef up their compliance and risk management processes even more now because of the rigorous checks and due diligence to be done.
Source : CNA – 14 May 2013