Everything You Need To Know About Common Reporting Standards (CRS)

Everything You Need To Know About Common Reporting Standards (CRS)

Before Common Reporting Standards (CRS) was passed, the Organization for Economic Co-operation and Development was using Standards for Automatic Exchange of Financial Account Information. CSR was passed in 2014 by 47 countries that sought to share data about residents’ income and assets in a standard manner. Hong-Kong is still a paradise…

The previous information upon request system proved to be less effective and could not deter tax evasion. Unlike the old system, the new model will allow systematic transfer of all accounting information which makes it very difficult to hide tax details. CRS has been endorsed by all OECD members and others including Singapore, India, Brazil, Indonesia, Colombia, China, Latvia, South Africa, Saudi Arabia, Malaysia, Lithuania, and Costa Rica. Please note that Hong-Kong signed the CRS with United Kingdom and Japan (= data exchange between these countries).

An International competent authority Agreement  

CRS provides for an automated exchange of info as premised in Article six of Convention on Mutual Administrative Assistance in Tax Matters.

The convention outlines that nature of info that can be exchanged, how it will be exchanged, when it should be exchanged, and standards of the process. Notably, even Panama has agreed to be compliant after the April 2016 leak of Panama papers.

The reporting time frame 

The reporting timeframe differs between various countries. In 2017, the following nations will be required to report; Anguilla, Barbados, Belgium, British Virgin Islands, Bulgaria,  Colombia, Croatia,  Cyprus, Czech Republic, Dominica, Estonia, Faroe Islands, France, Germany,  Greece, Greenland, Hungary, Iceland, Ireland, Isle of Man, Italy,  Korea, Liechtenstein,  Luxembourg, Malta,  Montserrat, Netherlands, Norway, Poland,  Romania, Seychelles, Slovenia, South Africa,  Sweden, Turks and Caicos Islands, Argentina, Bermuda, Cayman Islands, Curaçao, Denmark, Finland, Gibraltar, Guernsey, India, Jersey, Latvia, Lithuania, Mexico, Niue, Portugal, San Marino, Slovak Republic, Spain, Trinidad and Tobago, and United Kingdom

In 2018, the following countries will follow; Albania, Antigua and Barbuda, Australia, Austria, The Bahamas, Brazil, Brunei Darussalam, Chile, China,  Costa Rica, Ghana, Grenada, Indonesia, Israel, Japan,  Marshall Islands, Malaysia,  Monaco,  New Zealand, Russia, Saint Kitts and Nevis, Saint Lucia, Saudi Arabia, Sint Maarten, Turkey, United Arab Emirates, Vanuatu, Andorra, Aruba, Belize, Canada, Cook Islands, Kuwait, Macao (China), Mauritius, Nauru, Qatar, Samoa, Saint Vincent and the Grenadines, Singapore, Switzerland, Uruguay,

Info that signatory members will exchange 

Every year, member countries will exchange the following information.

  • Names, addresses, TIN (tax identification number), birth dates and place on reportable individuals.
  • Account numbers
  • The name of the reporting bank (financial institution)
  • Current account balances

CRS Reportable Accounts

While OECD does not define what a reportable account should be, individual members are left at freedom to establish individual standards of who to report. Each county has to carry due diligence depending on its tax and fiscal systems to pinpoint those who are reportable or not.

Questions abound on developing states 

While the impacts of tax evasion are catastrophic both to local economies and internationally, questions are rife about developing countries. CRS has been criticized for being quiet on developing countries.

Transparency groups fear that tax evaders could shift to emerging nations because they are not mentioned anywhere. They argue that it is prudent to focus on CRS from a long-term perspective to address the problem of tax evasion completely.

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