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Ready or not, here comes CRS implementation

26 June 2017   (0 Comments)
Posted by: Author: Lisa Brunton
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Author: Lisa Brunton (CDH)

In September 2013, the G20 endorsed the Organisation for Economic Cooperation and Development’s (OECD’s) proposal for a comprehensive global model for automatic exchange of information, and offered to work with the OECD, to develop a new unified standard for automatic exchange of information with the objective of combating tax evasion; ensuring tax compliance; and advancing global tax transparency.

The Global Forum on Transparency and Exchange of Information for Tax Purposes monitors the standards on tax transparency and the exchange of tax information, namely exchange of information on request (EOIR); and automatic exchange of information (AEOI). 

During 2014, the OECD, together with the G20, developed the Standard for Automatic Exchange of Financial Account Information in Tax Matters (Standard). The Standard draws extensively on earlier work of the OECD in the area of AEOI. It incorporates progress made within the European Union, as well as global anti-money laundering (AML) standards, with the intergovernmental implementation of the Foreign Account Tax Compliance Act (FATCA) having acted as a catalyst for the move towards AEOI in a multilateral context. 

The Standard extends and accelerates implementation of the OECD standard on AEOI; and requires substantial compliance by all Global Forum member countries with the standards of transparency required for EOIR. The OECD simultaneously proposed intensifying cooperation on transparency with regard to beneficial ownership – a proposal that was indubitably prompted by the revelations contained in the Panama papers that were leaked in April 2016.

The Standard is also known as the OECD’s Common Reporting Standard (CRS). It requires jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis, the intention being to reduce inter-jurisdictional tax evasion. It is also envisaged that the annual automatic exchange of third party information will enhance domestic tax compliance within the participating jurisdictions. 

The CRS sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.

In total, 100 jurisdictions have agreed to start automatically exchanging financial account information in September 2017 and 2018, under the CRS. 

Please click here to read more.

This article first appeared on cliffedekkerhofmeyr.com.


 

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