Singapore Government Sets Small Business Controllers Astir As AEOI Comes Knocking

singapore registered controllers red tape
Image by James Petts
Until now the controllers of most local businesses could sit quietly in the background, passively earning money. To the world at large they appeare to be unconnected with the company providing their income or wealth. In the new world of AEOI and FATCA, goverments no longer condone such anonymity. These folks are now deemed Registerable Controllers” whom we describe in more detail further on.

For government departments to learn who actually controls the business is a significant chore today. So legislation will now go into effect on 31 March 2017 to rectify that problem.

From that time forward, some companies must maintain a register of their “Registerable Controllers”. Government owned companies, financial institutions and companies traded on a stock exchange are exempt.
Their registrar’s office or the registered address will keep a new document known as the “Register of Controllers”. You can find more detail on it here

Registerable Controllers

The legislation is interesting in that it doesn’t say who IS a registerable controller; it defines who isn’t one.
If you (either as a person or a company) control a company indirectly through one or more controllers, you aren’t a controller. In that case, don’t have to appear on the register. In other words, for example:

  1. If you are company A and own or have a significant interest in company B and
  2. company B owns company C,
  3. then B would have to register with C as its controller and
  4. A would have to register with B as its controller.

Because 25% interest in the company or in its voting shares is the cut-off. A company could have up to four registered controllers, if they each controlled 25% of the voting shares.

More Information

This is just a brief summary of how the law works. There are more details for the immense variety of ownership and control structures that could exist, but the principal is always the same:

  1. If the company is already statutorily required to keep a record of its controllers somewhere, it isn’t required to maintain a second copy.
  2. If an individual or legal person controls a company indirectly through one or more companies, they need only be listed at the directly owned company(ies) subject to a above.

As always, the devil is in the details, which you can find here.

AEOI, Taxes and Growing Your Market in a Static World

Birth Rate Map Presages AEOI policy.

Map by Ali Zitan Released into the public domain under Creative Commons CC0 1.0 Universal Public Domain Dedication

You can get a quick intimation of what your market is going to look like in the future with a simple look at the map above. You can also determine what each market’s tax policies, including AEOI and BEPS, are going to be by looking at the same map.


If your market is not experiencing a growth in population then you will find business gets harder over time. For two hundred years, demographics have worked in favour of the business person. Growing populations meant more business. Now, the Middle East and Africa account for almost all of the world’s population growth. Business can no longer depend on mere population growth to carry it forward. As the next graph indicates, world population is reaching a point where it should become static in the future after which it will slowly decline.
Declining fertility rates force AEOI policies

If you are in a country such as Singapore or Dubai you must be thinking “does this guy have any idea of what he’s saying?” Well, yes, I do. Don’t be deceived by your local situation. There are a few places where populations have been growing substantially and quickly. Not only small, hot-house economies like Singapore and Dubai have experienced rapid growth in a short period of time. Many cities around the world are growing much more rapidly than their countries. The U.S. and Canada continue to grow their populations as a result of their liberal immigration policies. Each of these trends marks something different in terms of long-term sustainability.

The Rise and Fall of Cities

Cities such as the coastal cities and provincial capitals of China have experienced phenomenal growth.  That was to be expected as workers from the hinterlands flocked to the cities to provide the cheap labor for new factories. Dubai and Singapore have had high population growth as a result of temporary labor that has come to fill vacant jobs. But the jobs are artificial and result from temporary laws and regulations.

Population growth, in other words, has not been organic. It has been brought about by external forces that have been of immediate benefit but there’s no internal foundation for them. Such economies are far more fragile than they may seem. As they seek an even playing field, protectionist pressures of Europe and North America will make jobs disappear almost as quickly as they came. The cities of tomorrow that dot the Asian landscape would quickly hollow out.

China. It’s Always China

China’s situation is a case in point. Anyone whose business is in any way related to China is sitting on a time bomb.
China is so successful with its exports for three unsustainable reasons:

  • First, it subsidises its manufacturers by providing virtually no enforcement of either environmental policy or labor rights.
  • Second, it pegs the Yuan to a price significantly (up to 20%) lower than the price the market would naturally support, and
  • finally, it directly subsidises its manufacturers, making it possible for them to manufacture at or below cost and still make a profit.

China’s unbalanced approach to trade drives populist movements in Europe and America. You can bet that Donald Trump will act to create a balanced trade system starting on 20 January, 2017. The consequences for much of Asia are going to be dire over the short and medium term. Given China’s positive economic presence in every Asian economy, every country will be affected.

Demographics are not the Whole Story

There are three trends that will modify the consequences of the decline of population growth:

  • The Rise of the Robots
  • Distribution of the fruits of success
  • Economic rise of the many

Each of these is worthy of a separate discussion. For the moment I’d like to discuss the interplay of the final two.

Wealth Inequality Drives Economic Collapse

Under our current distribution systems, there is a link between the work you do and your ability to consume. Your work may entirely beneficial, as with a health worker. Or your work may be pernicious, as with a cocaine dealer. Both have in common is that they must work to generate income and survive.

Unskilled or semi-skilled labourer, too, needs to work to generate an income under today’s system and this is especially true in Asia. As jobs disappear, so does income. No income means no consumption. Under today’s policies, that means that your business is likely falter or die as net jobs move out of Asia.

Those at the top of the income distribution won’t be bothered; quality time is their issue, not food and shelter. If your business depends on the bottom 99% of society, you are probably in for a rough ride.

Government Response

Governments really have no choice but to locate revenue sources that are eluding them or to raise taxes. Or both. Between twenty and forty trillion dollars in wealth are being hidden from governments today. As much as half of it provides no economic benefit… it is simply hidden away and gathering dust. Even the money that is supposedly in the economy shows up as overpriced stocks and overpriced real estate. That doesn’t create jobs. All those overpriced assets are simply waiting for the next, greater fool to purchase them. When the implosion comes, there won’t be any greater fools. The Ponzi game will be over.

Governments know this. They want those assets in circulation. They want to create jobs. And so they must scare the money back into productive use in the economy or take the money and do the job themselves. It really isn’t very complicated. Given that, AEOI, the Automatic Exchange of (tax) Information is nearly ideal.

Can Anyone Resist AEOI?

AEOI will be nearly universal. Only countries with adequate demographics, economic and political/military power can resist. Take another look at the map. Each purple country has demographics working against it. As you can imagine, each has an urgent need for AEOI to expand its revenue. If we check here we can find out which ones have low unemployment. Because we are looking for strong economies, we look for low unemployment. It seems just a bit of a surprise that not only the U.S. shows up favourably, so does Mexico. And Chile is another good performer. Finally we want to add in the test of political/military power. Among the three finalists, the dominance of the U.S. is unquestionable. Consequently, we rate the U.S. as the least susceptible to AEOI.

You probably aren’t very happy with that conclusion. The mass media, popular wisdom and your personal feelings may put you in denial. While you may wish it were some other country, the country most likely to be able to resist AEOI is the United States.

We have arrived at this conclusion through various chains of reasoning. It seems like no matter where we start, we end up at the same point: the U.S. is the county most able to resist AEOI.

With the offshore jurisdictions ability to hide your assets and the BEPS program killing transfer pricing schemes, the U.S. is shaping up as the place where you will be able to avoid AEOI, but may also be able to more favourable tax treatment than you can at home. Sometimes truth is stranger than fiction. If you want to dig into this more deeply contact us here or read some of our earlier postings on AEOI, CRS and BEPS in this blog.
F. G. Bouman

CRS/AEOI Strikes: Singapore & Australia Will Exchange Banking Info.

National Australia Bank, Queen St. implements CRS/AEOI

Effective 1 July, 2017 Australians in Singapore and Singaporeans in Australia will find their tax information is now being shared with their home governments [via CRS/AEOI], or rather, the countries in which they are “tax residents”.  Australia has taken what is referred to as the “wide approach” [to CRS/AEOI] which means that up front the financial institutions will be asking their customers to list all of the countries in which they are tax residents and will report this information to the Australian Tax Office (ATO) along with the tax information.  The ATO will make a determination as to whether this information will be shared with any particular country, but it will not be up to the financial institution to make this determination.

Under CRS/AEOI in Australia, there is no minimum account balance required for reporting… i.e. if the account exists, it will be reported. This affects not only Australians and Singaporeans, it also affects Americans with accounts in Australia as, for ease of implementation, the ATO has decided the apply the same rules to FATCA (the one-way reporting of American accounts to the US IRS) as it applies to CRS in terms of financial institution reporting.  Financial institutions aren’t required to apply the CRS guidelines but it is anticipated that they will do so voluntarily in order to ease their own regulatory burden. If misery loves company then Aussies and Singaporeans will probably cheer the joining them in their pain.

To be clear, the ATO has classified the following types of organisations as financial institutions:

  • a Custodial Institution
  • a Depository Institution
  • an Investment Entity
  • a Specified Insurance Company
  • certain Trusts

The ATO has issued these guidelines which, although intended for financial institutions, can be useful for individuals trying to control their tax exposure resulting from CRS/AEOI. If you think that you may have any tax exposure in Australia, you should read through the guidelines; you may find that you are less (or more) exposed than you think.