The Common Reporting Standard (CRS) is an agreement between countries in the organisation for economic co-operation and development to collect and share data from their financial institutions annually. New laws governing the global Automatic Exchange of Information – currently being implemented as the OECD Common Reporting Standard (OECD CRS) – among major nations will place a greater compliance burden on financial institutions, many of which are already grappling with the complexities of the Foreign Account Tax Compliance Act (Fatca), the bilateral anti-tax evasion legislation imposed by the US.
I. Definition of CRS
CRS refers to a global reporting standard for the automatic exchange of information (AEoI) set forth by the Organization for Economic Cooperation and Development (OECD). More than 96 countries share information on residents’ assets and incomes in conformation with reporting standards. FATCA and CRS have similar characteristics on the surface, but underneath there are major differences. CRS is more wide reaching and requires a unified, cross-team effort to ensure readiness and compliance.
II. Scope of CRS
The CRS regulation applies to any financial institution located in a CRS jurisdiction and obliges those financial institutions to identify residents of another CRS jurisdiction. CRS applies to both individuals and entities. For the purpose of identifying CRS-jurisdiction residents, financial institutions are required to obtain self-certifications from their accounts holders. Among others, self-certifications information must include the country of tax residence and the tax identification number(s).
III. Requirements by CRS
CRS requires Financial Institutions to:
1) Identify customers for whom one of the following CRS indicia appears:
• Address (mailing, residence, post office box or care-of) in a CRS jurisdiction;
• Telephone number from a CRS jurisdiction that is the only telephone number;
• Standing instructions from their ING account to an account maintained in a CRS jurisdiction;
• Power of attorney on their account granted to a person with a CRS jurisdiction address (mailing, residence, post office box or care-of):
2) Document customers with CRS indicia. This means customers have to sign a self-certification form to confirm their CRS tax residence(s).
3) Report the following information:
• the identity and identification information of the CRS tax resident;
• their accounts and account balances;
• the financial income on these accounts, including gross proceeds.
IV. Opportunities with CRS
Cooperation and information sharing between tax authorities around the world can help ensure that taxpayers pay the right amount of tax to the right jurisdictions. This remarkable achievement offers significant opportunities to eradicate financial crime and tax fraud. For example, if the standard is properly adapted by the tax authorities it will minimise risks involving non-residents tax evading on taxable assets and activity in non-residence countries.
With a fraud detection framework that utilises hybrid analytics models and cutting edge entity resolution technology, tax authorities can develop global taxpayer analytical records for their residents, incorporating internally held data with the data provided by other tax authorities through CRS.
With this type of framework, the data provided by other tax authorities and third parties are bulk matched to the internal data through complex and bespoke layers of advanced analytics involving amongst other things social network analysis and indirect matching of entities based on common attributes that they share.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020,Dongmen Rd South, Luohu , Shenzhen, China.
Previous：Overview of Non Vessel Operating Common Carrier
Next：Shenzhen Ranks First in China in Economic Competitiveness