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Why are companies required to comply with FATCA and CRS regulations in Singapore?
FATCA:
FATCA is a U.S. law which requires all financial institutions (FIs) outside of the U.S. (also known as Foreign Financial Institutions, or FFIs) to regularly submit information on financial accounts held by U.S. persons to the U.S.
Internal Revenue Service (U.S. IRS). The U.S.’ intent of FATCA is to deter and detect U.S. tax evasion through the use of foreign financial accounts.
Failure to comply with the reporting obligations under FATCA will result in the U.S. Government imposing a 30% withholding tax on certain gross payments made from the U.S. to non-compliant FFIs. Singapore agreed to enter into a FATCA IGA with the U.S. to help Singapore-based FIs (SGFIs) manage their FATCA compliance burden.
SGFIs will need to perform due diligence checks to identify financial accounts held by U.S. persons. Thereafter, the SGFIs will need to report information pertaining to such accounts to IRAS, which will in turn transmit the information to the U.S. IRS.
CRS:
The Common Reporting Standard (CRS) is an internationally agreed standard for the automatic exchange of financial account information between jurisdictions for tax purposes, to better combat tax evasion and ensure tax compliance. Singapore has committed to implement the CRS and has
been exchanging financial account information with partner jurisdictions since September 2018.
A Reporting Singapore Financial Institution (SGFI) is required to register for CRS with IRAS. The entity is required to conduct due diligence on all Financial Accounts that it maintain and report the relevant account information in a timely and accurate manner to IRAS in an annual return.
For most business owners (especially small and medium-sized businesses), the requirements under the FATCA and CRS regulations could be overwhelming; that’s where outsourcing comes in handy.
FATCA and Common Reporting Standard (FATCA/CRS) Services in Singapore
We provide comprehensive solutions for FATCA and CRS-related matters in Singapore. These include the classification of entities, registration of entities, annual reporting services, and drafting of related compliance policies. Our suite of services include but is not limited to the following:
- Classification of Entity: Performance of classification assessment on the entity as per the relevant FATCA and CRS regulations. Completion of bank forms related to FATCA and CRS declarations.
- Registration of Entity with Local Tax Authority and IRS: Registration of Reporting Financial Institutions with the local tax authority and IRS, in accordance with local regulatory requirements.
- FATCA/CRS Annual Reporting Services: Preparation and submission of FATCA and CRS reports to the IRS or local tax authorities. This includes assessment of the reportability of the account holders of the Reporting Financial Institution and translation of the reporting data into XML schema adhering to the local requirements.
Cambridge Advisers as your provider of FATCA/CRS services in Singapore
Cambridge Advisers is a full-service corporate and compliance firm with expertise who are well-versed with the regulatory requirements under the FATCA/CRS Regulations.
Our extensive FATCA/CRS working knowledge across financial and non-financial entities gives an accurate assessment of your FATCA/CRS compliance requirement.
With a team of experts who can advise on all aspects, including entity classification, registration, annual reporting, and drafting of related policies, we can assist your company to streamline and navigate through the complexities of the regulatory requirements of FATCA/CRS.
Stay One Step Ahead of FATCA/CRS Compliance Requirements
With the changing landscape of legislation, financial institutions need to be on top of all new regulations to avoid hefty financial penalties and mitigate reputational risks. We are well positioned to help clients meet their reporting requirements and keep up with FATCA/CRS compliance requirements.
Cambridge Advisers offers an integrated solution that combines key FATCA and CRS compliance so that entities can comply with inter-government regulations. Outsource your FATCA/CRS compliance work to our team of experts at Cambridge Advisers.
Contact us for a free consultation today!
Frequently Asked Questions
The reporting obligations under FATCA/CRS primarily affect Financial Institutions, which can include banks, insurance companies, investment managers and custodians.
SGFIs will need to perform due diligence checks to identify financial accounts held by the account holders. Thereafter, the SGFIs will need to report information pertaining to such accounts to IRAS, which will in turn transmit the information to the U.S. IRS under FATCA and the participating jurisdictions under CRS.
The U.S. has developed two Model IGAs to simplify and overcome legal issues relating to the implementation of FATCA. Model 1 establishes a framework for FIs outside the U.S. to report account information of U.S. persons to the relevant domestic authority (IRAS in Singapore’s case) which in turn provides the information to the U.S. IRS.
Model 2 establishes a framework for FIs outside the U.S. to directly report account information of U.S. persons to the U.S. IRS, which is supplemented by information exchange upon request between the U.S. IRS and its relevant government counterpart.
The CRS differs from the FATCA Model 1 IGA requirements in several ways, mainly because of the multilateral dimension of the CRS. For example, the CRS focuses only on tax residence to identify Reportable Persons whereas FATCA looks at both citizenship and tax residence in the identification of US Persons
Generally, the following information relating to a Reportable Person is reportable:
- Name
- Address
- Date of Birth
- Jurisdiction(s) of residence
- Taxpayer Identification Number (TINs)
- Account number
- Account balance or value
- Payment information