VZCZCXRO3423
RR RUEHDT RUEHPB
DE RUEHGP #0294/01 0890738
ZNR UUUUU ZZH
R 300738Z MAR 09
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 6546
INFO RUCPDOC/USDOC WASHDC
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHBS/AMEMBASSY BRUSSELS 0297
RUEHFR/AMEMBASSY PARIS 0336
RUEHRL/AMEMBASSY BERLIN 0147
RUEHLO/AMEMBASSY LONDON 0537
RUEHRO/AMEMBASSY ROME 0150
RUEHBM/AMEMBASSY BUCHAREST 0024
RUEHDL/AMEMBASSY DUBLIN 0047
RUEHSF/AMEMBASSY SOFIA 0017
RUEHBS/USEU BRUSSELS
RUEHHK/AMCONSUL HONG KONG 6468

UNCLAS SECTION 01 OF 02 SINGAPORE 000294 
 
SENSITIVE 
SIPDIS 
 
TREASURY FOR TRAND, MNUGENT 
 
E.O. 12958: N/A 
TAGS: EFIN ECON EINV SN
 
SUBJECT: SINGAPORE MAKING CHANGES TO AVOID TAX HAVEN LABEL 
 
¶1.  This cable is classified Sensitive but Unclassified (SBU) 
please protect accordingly. 
 
¶2. (SBU) Summary.  The Government of Singapore (GOS), 
concerned that being labeled as a non-cooperative tax haven 
would dent its ambitions to become a global financial center, 
announced on March 6th that it would make necessary legal 
changes in order to adhere to an Organization for Economic 
Cooperation and Development (OECD) standard for information 
exchange on tax compliance.  At the same time, the GOS is 
pursuing an all-out lobbying effort to forestall any plans to 
put Singapore on any tax haven blacklist.  End Summary. 
 
Increased U.S. and G-20 Pressure 
-------------------------------- 
 
¶3.  (SBU) U.S. efforts to target uncooperative institutions 
and jurisdictions have jarred Singapore officials.  In 
February, the USG levied a $780m fine on Switzerland's UBS 
Bank, which narrowly escaped criminal indictment by turning 
over names of some 250-300 of its problematic wealthy clients. 
The March re-introduction of the Stop Tax Haven Abuse Act to 
penalize tax havens also raised concerns in Singapore.  The 
bill explicitly named Singapore as a tax haven and would 
provide the U.S. government with a set of new tools to clamp 
down on offshore tax and tax shelter abuses. 
 
¶4. (SBU) Internationally, the GOS is also concerned about 
European plans to push for the publication of a list of non- 
cooperative tax havens at the upcoming Group of 20 (G-20) 
meeting in London.  At their March meeting in Horsham, the G- 
20 Finance Ministers called on "the relevant international 
bodies [to] identify non-cooperative jurisdictions and develop 
a tool box of effective countermeasures" to address the 
problem of jurisdictions that do not share information on tax 
issues (among other issues).  International bodies working on 
the issue include the OECD, which has developed standards for 
transparency and effective exchange of tax information, and a 
United Nations committee of tax experts, which endorsed those 
standards last October.  Some have called on the OECD to 
create a public list of uncooperative tax havens.  According 
to press reports, OECD internal staff reports have included 
Singapore, among others, as a non-compliant jurisdiction. 
Singapore has undertaken an intense lobbying effort among 
members of the G-20 to stop the announcement of a blacklist or 
at least to prevent Singapore from being put on one. 
 
The Singapore Government's Stance 
--------------------------------- 
 
¶5.  (SBU) Singapore does not consider itself as a tax haven. 
The GOS argues that its corporate income tax rate of 17 
percent, while low and competitive, is not among the lowest in 
the world. Other countries and territories like Hong Kong 
(16.5 percent), Romania (16 percent), Ireland (12.5 percent) 
and Bulgaria (10 percent) have rates even lower than 
Singapore.  The GOS also argues that Singapore is not a magnet 
for shell or "fly by night" companies, but rather attracts 
companies with concrete business activities.  Officials note 
that at least 25 percent of GDP is manufacturing.  Most 
importantly, the GOS argues that the rule of law is strong in 
Singapore and it has signed 60 tax agreements with other 
countries. 
 
¶6.  (SBU) Nevertheless, the pressure convinced the GOS that it 
would have to take pro-active measures to protect its 
reputation as a reputable global financial center.  In a 
statement released on March 6, the Ministry of Finance (MoF) 
announced that it will introduce draft legislative amendments 
to provide the legal basis for its compliance with the OECD 
standard in mid-2009.  Once the amendments have gained 
parliamentary approval, Singapore has expressed its 
willingness to extend further cooperation on information 
exchange through double taxation agreements (DTAs), with the 
caveat that it will respond only to legitimate requests for 
information and not fishing expeditions by foreign 
 
SINGAPORE 00000294  002 OF 002 
 
 
jurisdictions.  The GOS also hopes to negotiate and conclude 
further DTAs.  The United States does not have a comprehensive 
DTA with Singapore, in part due to concerns about Singapore's 
information sharing practices. 
 
¶7. (SBU) Singapore's government-linked press has tried to put 
a brave face on the dramatic change in policy by arguing that 
relaxing banking secrecy rules may not necessarily be bad for 
Singapore's ambition of growing its financial sector. 
Analysts quoted in local newspapers suggest that closing the 
loopholes to tax fraud and tax evasion by foreigners could 
strengthen the robustness of the rule of law in Singapore. 
According to press reports, Mr. Anuj Kagalwala, corporate tax 
partner at PricewaterhouseCoopers, suggested that endorsing 
OECD standards should be a positive for Singapore as it could 
create greater acceptance of Singapore as a private banking 
center from the governments of the developed world. 
 
Comment 
------- 
 
¶8. (SBU) While Singapore has plans to amend its bank secrecy 
legislation to provide for greater transparency and 
information exchange, we remain doubtful about how far the GOS 
will go in sharing information on criminal investigation 
requests by foreign jurisdictions.  Generally, the GOS adheres 
to the letter of the law.  In its statement endorsing the OECD 
standard, the MoF seemed to imply that it will pick and choose 
the foreign jurisdictions to which it will extend cooperation 
in the exchange of information.  Doubts among the 
international community will remain until the GOS proves the 
effectiveness of its new laws and its seriousness in 
implementing them. 
 
SHIELDS