July 1, 2008
A federal judge today gave the ok for an IRS investigation to move forward against UBS, a swiss bank. The summons is fairly unprecedented as Swiss banks pride themselves on privacy. In a tax-evasion investigation, IRS is seeking information about US citizens who have not disclosed swiss bank records to the IRS.
UBS is currently battling mounting losses stemming from the subprime financial shenanigans, and the IRS may be seeking to take advantage of UBS’s wobbly condition to bring them to their knees on this issue.What is happening at UBS, if it proceeds, likely would pave the way for further action against Swiss Banks. It should be noted that it is not clear whether UBS will in fact release any information. If they do, the trust in Swiss Banking will fall dramatically, possibly spurring a flight of capital.
This brings me to Singapore. Singapore is growing quickly as a rival to Switzerland as a banking haven. By cutting personal income taxes to 20% and tightening account privacy, Singapore is quickly becoming a go-to haven for Asia’s growing number of millionaires.
Other features of Singapore banking are that any authority seeking information from a Singapore bank must prove that the customer violated tax laws; a tough thing to do if they’re looking for information in the first place. Trust accounts in Singapore are much more flexible than those in Europe as well; and as a result; the amount of assets in trust accounts in Singapore is now over $100B.
Singapore has also revised its laws allowing foreigners with enough assets to acquire property. Given what is happening with UBS and the wealth creation in Singapore; it is an office space market and economy to keep a very close eye on.
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