German Finance Minister intends to sign tax treaty with Singapore

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Germany's government is seeking to strengthen its tax treaty with Singapore to help it ensure German nationals aren't stashing assets in the Southeast Asian nation to evade taxes.
German Finance Minister Wolfgang Schaeuble will discuss revising Germany's bilateral tax treaty with Singapore during a visit to the Southeast Asian country Sunday as part of Berlin's efforts to step up its battle against tax evasion, a spokesman for the German finance ministry said Monday. A spokesman for Singapore's Ministry of Finance said the two countries are in talks to revise their 2006 double taxation agreement.
The move comes amid a broadening effort by authorities in the U.S. and Europe to penetrate the barriers of banking secrecy around the globe. Germany is concerned some of its citizens who once stashed their wealth in secret Swiss bank accounts have begun to move money to Singapore ahead of a new tax treaty with Switzerland that will make it harder for Germans to park their money in Swiss accounts out of the reach of the German tax authorities.
"The revision of the current bilateral tax treaty is part of our strategy to take a comprehensive global approach in fighting tax evasion," the German finance ministry spokesman said.
Mr. Schaeuble will meet with Prime Minister Lee Hsien Loong, among other Singapore officials during his visit.
"Singapore's policy of enhancing tax cooperation with its tax treaty partners is not a new one," the Singapore finance ministry's spokesman said. "Singapore is committed to the internationally agreed standard for exchange of information."
Since Singapore adopted the Organization for Economic Co-operation and Development guidelines on tax transparency in 2009, it has added them to bilateral tax agreements with 35 countries "and will continue to do so with others," the spokesman said.
As in Switzerland, Germany wants Singapore to become more transparent and make public information about German investors in Singapore to German tax authorities. In the new tax treaty with Switzerland, the Swiss government has agreed to withhold the tax due on German accounts in Swiss banks but doesn't provide the German government with the names of the investors. That way, Germany gets the taxes owed, but Switzerland still can ensure the secrecy of its bank accounts.
Abhijit Ghosh, a Singapore-based tax partner at PwC Services LLP, said much of the capital migration from Europe to Singapore is to try to take advantage of better investment returns. "It is definitely happening. Against the backdrop of the euro crisis, you do see a number of fund managers and bankers who are setting up shop in Singapore to tap into leverage on the Asian growth story here because of the erosion of the capital base in Europe," he said.
But that by itself is no reason for German authorities to be concerned, "unless they have reason to believe the flight of capital is meant to evade taxes," he said.
Singapore came under scrutiny in recent years as the U.S. and Europe began cracking down on offshore bank account holders, seeking more transparency from countries with a long tradition of banking secrecy like Switzerland. Singapore's bid to align itself with international standards helped it in November 2009 to get off an OECD "gray list" of countries targeted by the U.S., France, Germany and others over concerns that their tax laws hide tax evaders and money launderers.
When it adopted the OECD guidelines, Singapore said it wanted to emphasize "its 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."