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Germany to negotiate deal with Singapore against tax evasion

BERLIN, Oct 6 (Reuters) - Germany will start talks withSingapore next week on a deal to prevent its citizens fromevading taxes by shifting their money to the Asian state, agovernment source said on Saturday.

During a visit to Asia next week, German Finance MinisterWolfgang Schaeuble will fly to Singapore, the region's prominentwealth management centre, to try to negotiate an agreement withthe government, the source said.

According to media reports, there are signs German taxdodgers are shifting funds to Singapore from Switzerland, whichsigned a tax deal with Germany earlier this year.

The source said hopes were high that Singapore would agreeto give German authorities information on assets held in thecountry by wealthy German citizens as it had stressed earlierthis year it did not tolerate tax evasion.

"We are acting on the assumption that Singapore is pursuinga clean money strategy," the source said.

Singapore's central bank said in August it had warned bankslast year to guard against funds being transferred into theisland state to evade taxation elsewhere, with an eye to new taxtreaties being implemented in Europe.

It did not tolerate such flows, and Singapore wascooperating with other countries to prevent abuse of itsfinancial system, a spokeswoman for the Monetary Authority ofSingapore said.

Switzerland and Germany hammered out a new deal in April toconfront tax evasion, but the centre-left SPD opposition hassaid it will block the pact in the upper house of parliament asit is too lenient on tax dodgers.

One of the SPD's criticisms has been that, as it stands, theagreement would allow people to evade taxes by taking theirmoney out of Switzerland before the deal takes effect.

(Reporting by Hans-Edzard Busemann; Writing by Sarah Marsh;Editing by Catherine Evans)

((sarah.marsh@thomsonreuters.com)(+ 49 30 2888 5226))

Keywords: GERMANY TAX/SINGAPORE