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FATCA Obligations of Reporting Singaporean Financial Institutions (“Reporting SGFIs”)
Reporting SGFIs are expected to take reference from the
Compliance Requirements of the Singapore-US Intergovernmental Agreement on Foreign Account Tax Compliance Act (Fourth Edition) (PDF, 1,168KB) which provides guidance to businesses, entities and persons affected by the Singapore-US Intergovernmental Agreement on Foreign Account Tax Compliance Act (“FATCA”).
As a Reporting Singaporean Financial Institution (“Reporting SGFI”), you are required to comply with the following obligations under the FATCA Regulations:
| Obligations of RSGFIs | FATCA Guidance and References |
|---|---|
| Register for FATCA with IRAS |
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| Perform due diligence on all Financial Accounts that you maintain (e.g. Preexisting Accounts for individuals and entities, New Accounts for individuals and entities) as well as payments to Non-participating Financial Institutions |
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| Report all Reportable Accounts that you maintain or file a Nil Return (if you do not maintain any Reportable Accounts) to IRAS. |
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You may also refer to the IRAS FATCA FAQs (PDF, 484KB) for more information.
Compliance with FATCA obligations
IRAS will work with and assist Reporting SGFIs that are voluntarily compliant to ensure their compliance with FATCA. On the other hand, IRAS will not hesitate to take deterrent measures such as issuing warnings and imposing penalties on errant Reporting SGFIs that choose to be non-compliant.
Minor and Administrative Errors
US Inland Revenue Service (“IRS”) will notify IRAS when they believe that the FATCA returns submitted by Reporting SGFI contain administrative errors or other minor errors which may have led to incorrect or incomplete information reporting or resulted in other infringements of FATCA Regulations. IRAS may exercise powers conferred by the Income Tax Act (“ITA”) to obtain corrected and/or complete information to resolve the errors.
Examples of minor errors could include:
- Data fields missing or incomplete;
- Data that has been corrupted;
- Use of an incompatible format.
Significant Non-Compliance
US Inland Revenue Service (“IRS”) will notify IRAS when they believe that a Reporting SGFI is in significant non-compliance with FATCA obligations. As above, IRAS may exercise powers conferred by the ITA to obtain corrected and/or complete information to resolve the errors if necessary.
Examples of significant non-compliance are:
- Repeated failure to file a return of repeated late filing
- On-going or repeated failure to supply accurate information or establish appropriate governance or due diligence processes
- The intentional provision of substantially incorrect information
- The deliberate or negligent omission of required information
- Otherwise actively assisting Specified US Persons in avoiding the reporting obligations
If the enforcement actions do not resolve the non-compliance within a period of 18 months after notification provided by IRS, IRS shall treat the Reporting SGFI as a Non-participating Financial Institution (“NPFFI”) and the relevant consequences associated with that status will be applied (withholding 30% of any US source withholdable payments to NPFFI).
Penalties for Errors and Non-Compliance
Non-compliant Reporting SGFIs may also be liable to penalties under the Income Tax Act (“ITA”).
| Offences | Penalties |
|---|---|
| If found guilty under Section 105M(1) of the Income Tax Act:
|
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If found guilty under Section 105M(1B) of the Income Tax Act:
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| Provision to IRAS any document which contains any information or any information known to be false or misleading | If found guilty under Section 105M(3) of the Income Tax Act:
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Voluntary Disclosure of Errors
IRAS believes that majority of Reporting SGFIs are voluntarily compliant. IRAS understand that some Reporting SGFIs may occasionally make errors in their FATCA returns due to negligence or lack of understanding of their FATCA obligations.
IRAS encourage Reporting SGFIs who have made errors in their FATCA returns to come forward voluntarily as soon as they have uncovered the error to disclose these errors or omissions and get their FATCA obligations right.
For voluntary disclosure of error(s) relating to FATCA returns, you may provide information to IRAS.
Reporting of FATCA non-compliance
If you are aware of any potential FATCA non-compliance, including the use of abusive schemes to circumvent reporting under the FATCA or intentional provision of false information to IRAS relating to FATCA, you may provide information to IRAS.
Your information could help make the system fairer for all of us. Your identity and all information / documents provided by you will be kept confidential.
Useful Information You Can Provide Us
IRAS will review the information that you have provided and will initiate investigation if our review indicates that an offence has likely been committed.
To assist us in our review, please provide the following:
- Particulars of the Reporting SGFI or Individual which was purportedly non-compliant (e.g. Full name, tax reference number, address, contact number, identities of parties involved in the scheme, product and/or structure);
- Description of the potential FATCA non-compliance incident, including the features of the scheme that may be used to circumvent reporting under the FATCA where applicable;
- Explain how and when you became aware of the non-compliance incident
- The Reporting Year(s) involved as well as how active or extensive is the scheme, product and/or structure being promoted or used where applicable; and
- Supporting information or documentary evidence currently in your possession indicating non-compliance with the FATCA, if any (e.g. details of relevant account holders, self-certifications, email correspondences, marketing materials). For records that
are not in your possession, please describe them and identify their location(s) where possible.
What IRAS would do with your information
IRAS takes every report of non-compliance seriously and will make an independent evaluation of the case using the information provided as well as other information available to us. Where IRAS decide that an investigation is warranted, IRAS will follow up accordingly.
Please note that IRAS is bound by strict secrecy provisions. Thus, IRAS will not be able to update you on how IRAS deal with the information provided including; whether IRAS have decided to commence investigation and the status or outcome of the case in the event that IRAS have investigated the case.
IRAS will not handle frivolous reports, e.g. personal or internal disputes among business partners, commercial disputes between private parties.