Billionaire Australians buying exclusive condominiums. Germans moving money from Swiss accounts. Secretive banking laws. Asia’s premier wealth management center. Low tax rates.
As Singapore revels in its reputation as an open economy with the world’s highest concentration of millionaires, the tiny island of 5.3 million people is also accused of being a magnet for tax evaders — an image it is vehemently seeking to banish.
Amid German concerns that its wealthy citizens are moving funds from Switzerland before a new German-Swiss tax treaty takes effect next year, Singapore and Germany said on Sunday they had agreed to bolster their double-taxation agreement with internationally agreed standards on information sharing.
Photo: Reuters
“Banking secrecy will not constitute an obstacle to exchanging information,” said the joint statement, which came at the end of German Finance Minister Wolfgang Schaeuble’s weekend visit to Singapore.
Media reports have put the amount of German money moving to Singapore in the double-digit billions.
“The perception is that Swiss banks have concluded Switzerland is unlikely to remain a tax haven for much longer and Singapore is the new place to do business,” said Ronen Palan, a professor at City University London who has conducted numerous studies on offshore finance.
Swiss banks could see assets from western European clients fall 28 percent to 623 billion Swiss francs (US$668 billion) by 2014 because of the deals to tax undeclared accounts, the Boston Consulting Group said in a report in May.
Singapore and its rival Hong Kong look set to benefit.
Together, the two Asian hubs manage US$1 trillion in offshore funds, with about 75 percent of that coming from within the region.
However, Singapore and Hong Kong may overtake Switzerland — now the largest offshore wealth center with assets of about US$2.1 trillion — in 15 to 20 years, the report said.
With tax rates that top out at 20 percent and no capital gains tax, Singapore is already synonymous with wealth. BMW and Mercedes were the top two brands among all cars sold in the first eight months of this year, bestsellingcarsblog.com says.
Safe and clean, the city-state bills itself as a tropical refuge with exclusive residential enclaves, a marina for super-yachts, two casinos, fine dining, high-end boutiques and an annual Formula One race that brings in the global jet-set.
Rich residents include Eduardo Saverin, the co-founder of Facebook, who has called Singapore home since 2009.
Locals who made fortunes in real estate, finance and trading figured prominently, but the list also included New Zealand-born investor Richard Chandler with US$2.9 billion and China-born property developer Zhong Sheng Jian (鐘聲堅) with US$1.4 billion.
A 10 percent property duty imposed on foreigners, part of efforts to cool the housing market, has done little to dissuade the ultra-wealthy — many of them Chinese, Indian, Malaysian and Indonesian -— from ploughing money into Singapore real estate.
Australian mining tycoons are also moving in. Gina Rinehart reportedly paid US$46.7 million for two units at Seven Palms Sentosa Cove, a luxury beachfront condominium, while Nathan Tinkler recently moved his family to Singapore.
Over the past three years, Singapore has upgraded half of its 70 tax treaties with other countries to make it easier to exchange information on possible tax dodgers.
From next year, bankers who help clients evade tax risk ending up in court on money laundering charges.
The new rules are part of “efforts to protect the integrity and reputation of Singapore as a trusted international financial center,” the Monetary Authority of Singapore, the central bank and financial regulator, said last week.
Thomas Eigenthaler, chairman of the German Tax Union, welcomed an upgrade to Germany and Singapore’s “rudimentary, fragmentary” tax agreement, but said “the decisive thing will be how it is actually implemented.”
Palan said trying to assess the city-state’s credentials is tricky, partly due to difficulties getting detailed information about its offshore finance sector.
“We cannot get any access to Singapore and that for us does raise flags,” he said. “It’s easier to do research on Jersey or Switzerland, but in Singapore it’s almost impossible.”
As more tax-paying millionaires want to get exposure to Asian growth, they say, Singapore must do all it can to show it will not tolerate black money.
“Singapore stands to gain a lot from proactively embracing the move towards global tax transparency,” said Dawn Quek, a senior associate at law firm Baker & McKenzie, Wong & Leow.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI
Qualcomm Inc, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump. Revenue in the three months ended in June will be US$8.8 billion to US$9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and earnings of US$2.16 a share. The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover this year. The San