SINGAPORE: According to the recently released “White Paper on Black Money," a report by the Indian Ministry of Finance, Singapore was the source of 9.17% or approximately US$11.9 billion of FDI equity inflows to the country between 2000 and 2011. The paper also cited that Singapore is a tax haven because of the following reasons: Singapore is a small economy; A small economy cannot be the source of large scale investments; In order to conceal the identities of the investors from Indian revenue authorities and to evade taxes, investments are “round tripped" through Singapore; Said investors could primarily be Indian residents who have invested in their own companies. Asiabiz Services has recognized two factors as to why Singapore cannot be inferred as a tax haven. SINGAPORE'S REPUTATION AS A REGIONAL FINANCIAL HUB AND RESPECT FOR RULE OF LAW Singapore has developed into a robust regional financial hub in just over four decades. This is in part due to its high standards of financial regulation as well as its pro-business environment that is backed by sound corporate governance. While Singapore's central bank, the Monetary Authority of Singapore (MAS), allows well-managed risk taking and offers deep and liquid capital markets, it continually assesses its policies to ensure financial stability and soundness. MAS also has an anti-money laundering and countering the financing of terrorism framework (AML/CFT). The Singapore government also maintains an attractive Singapore corporate tax to attract and retain bonafide companies, including over 4,000 Indian companies in the republic. However, it does not tolerate tax evasion and other crimes that undermine its laws. Singapore privacy laws for example, provide the right to confidentiality of information to bank customers. However, banking confidentiality does and will not hinder the Singapore authorities from providing information to assist domestic or foreign authorities in investigations of potential criminal activities. Furthermore, Singapore practices transparency at all levels, and practices the OECD Standard for Exchange of Information, an important tool in fighting non-compliance with the tax laws in an increasingly borderless world. “All these measures ensure that the foundation for setting up companies in Singapore are sound. Hence, that also means that every entity that opts for Singapore company formation is authentic and not just a conduit for money laundering," said Mr. James Nuben, Head of Tax Division, Asiabiz Services, a Singapore company registration consultancy. SINGAPORE IS INDIA'S 2ND LARGEST INVESTOR Between 2001 and 2011, the only 3% of Singapore's overall investment outflows worth US$316 billion were channeled to India. This is partly because Singapore is India's largest trading partner in ASEAN. Following the signing of the Comprehensive Economic Cooperation Agreement in 2005, which included an Avoidance of Double Taxation (DTA) agreement, bilateral trade has grown 20% annually. “Vice versa, Singapore is India's gateway to ASEAN, China and APEC, making it an attractive and natural choice for Indian companies which are keen to tap emerging markets. It is therefore contentious to infer that an economy as small as Singapore is unable to be the source of large scale investments and inversely, inferred as a tax haven," affirmed Mr. Nuben.
