The treaty, agreed on Sunday, is also the latest in a number of pacts Berlin has hammered out in recent years, as it seeks to prevent its wealthiest taxpayers from hiding money in foreign accounts.
The agreement came during a visit to Singapore by Wolfgang Schäuble, Germany’s finance minister, and is seen as the latest in a sequence of measures that Germany has implemented in the wake of the unofficial emergence of client data from Swiss banks, beginning around 2008, that shed a light on the scale of tax evasion by some German citizens.
It also comes as Singapore is riding high as a global financial centre. Growing numbers of Asians as well as investors from as far away as Europe and the US have been shifting their wealth to its institutions, in response to economic and geopolitical concerns elsewhere.
Singapore’s emergence as a world class financial centre follows years of fine-tuning by the city-state’s regulators. Borrowing from the regulatory framework of some of the world’s best-run financial jurisdictions, they have sought to create an environment that is condusive to wealth creation while at the same time safeguarding investors.
As reported, last week Singapore announced plans to crack down on institutions that facilitate tax evasion by classifying such infractions as money-laundering.
‘To be ratified by both sides’
In a statement on the German Finance Ministry’s website, the deal is described as being a standard tax information exchange agreement (TIEA), as set out in the Organisation for Economic Cooperation and Development’s 2005 Model Tax Convention on Income and on Capital.
Such TIEAs are designed to allow for the exchange of information "for the administration and enforcement of the domestic tax laws of the requesting country", the statement notes.
"The agreement will come into force after ratification by both sides domestically," the statement adds.
Other key points contained in the German Finance Ministry’s statement:
• Information may be exchanged on all types of tax, and no longer restricted "just to taxes on income and on capital"
• The exchange of information will no longer depend on the taxpayer being resident in one of the contracting states
• The "requested state" is obliged to obtain information "even in a case where it does not itself require the requested information for tax purposes"
• Banking secrecy "will not constitute an obstacle to exchanging information"
• Both countries will continue to explore ways "to enhance bilateral cooperation on tax matters"
Singapore ranks fourth on the Global Financial Centres Index’s most recent league table, which comes out twice yearly and was last published in September, behind London, New York and Hong Kong.
