BERLIN (Reuters) - Germany and Singapore have agreed to cooperate more closely to reduce tax evasion, the German Finance Ministry said, amid signs that German tax evaders are moving funds to Asia’s prominent wealth management center.
Recent media reports have suggested said that wealthy German citizens were shifting funds to Singapore from Switzerland, which signed a tax deal with Germany earlier this year.
The new agreement will come into effect once both countries have ratified it domestically and will allow the two states to obtain more information from each other.
The ministry said in a statement on Sunday a 2004 tax agreement between Germany and Singapore would be amended to conform to the international standards for exchanging information laid out by the Organisation for Economic Co-operation and Development (OECD).
The agreement will cover all kinds of taxes, not just capital and income tax as was previously the case. The exchange of information could apply to taxpayers not resident in Germany or Singapore and would not be hindered by banking secrecy rules, the ministry said.
Switzerland and Germany hammered out a new deal in April to confront tax evasion, but the center-left SPD opposition has said it will block the pact in the upper house of parliament, arguing it is too lenient on tax dodgers.
One of the SPD’s criticisms has been that the agreement would allow people to evade taxes by taking their money out of Switzerland before the deal takes effect.
Norbert Walter-Borjans, finance minister of the German state of North Rhine-Westphalia and one of the most vociferous critics of the Swiss tax deal, welcomed the agreement with Singapore.
“Every effective agreement which prevents tax evasion helps to make the tax system fairer and state finances more stable,” he said in a statement.
Reporting by Michelle Martin; Editing by Rosalind Russell