Common Reporting Standard

The Common Reporting Standard (CRS), formally referred to as the Standard for Automatic Exchange of Financial Account Information, is an information standard for the automatic exchange of information (AEoI), developed in the context of the Organisation for Economic Co-operation and Development (OECD). The legal basis for exchange of data is the Convention on Mutual Administrative Assistance in Tax Matters and the idea is based on the USA Foreign Account Tax Compliance Act (FATCA) implementation agreements.

2014 declaration

On May 6, 2014, forty-seven countries tentatively agreed on a "common reporting standard": an agreement to share information on residents' assets and incomes automatically in conformation with the standard.^[1] Until now, the parties to most treaties which are in place for sharing information have shared information upon request, which has not proved effective in preventing tax evasion. The new system is supposed to transfer all the relevant information automatically and systematically. This agreement is informally referred to as GATCA (the global version of FATCA)",^[2] but "CRS is not just an extension of FATCA".^[3] "The CRS has a much more ambitious scope, however, and modelling the standard on the FATCA rules has created problems for implementing it in Europe," complains one legal expert.^[4] A "private sector advocacy group that represents financial services and law firms" went even further in seeing a "showdown" between the two regimes.^[5]

Endorsing countries included all 34 OECD countries, as well as Argentina, Brazil, China, Colombia, Costa Rica, India, Indonesia, Latvia, Lithuania, Malaysia, Saudi Arabia, Singapore, and South Africa.^[1] In September 2014, the G20, at its meeting in Cairns, Australia, issued the G20 Common Reporting Standard Implementation Plan as part of its official resources.^[6]

Multilateral Competent Authority Agreement

On 12 July 2015, 53 jurisdictions signed an agreement to automatically exchange information based on Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters.^[7] This agreement specifies the details of what information will be exchanged and when, as set out in the Standard.^[8]

China,including Hong Kong and more than 80 other countries have agreed to become signatories.^[9]

However, there are still more than 100 countries which will not participate in the automatic information exchange.^[10] Many of those that have not signed are small countries. Among the large countries, USA has not signed the treaty.^[11]

In April 2016, shortly after the release of the Panama papers, Panama agreed to comply with the standard.^[12]

Reporting start years

As reported in 2015. Years have changed since for some!

The exact date of starting to exchange information differs between countries.

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

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

^[13]

Information to be exchanged

Each country will annually automatically exchange with the other country the below information in the case of Jurisdiction A with respect to each Jurisdiction B Reportable Account, and in the case of Jurisdiction B with respect to each Jurisdiction A Reportable Account:^[14]

1. the name, address, Taxpayer Identification Number and date and place of birth of each Reportable Person.
2. the account number
3. the name and identifying number of the Reporting Financial Institution;
4. the account balance or value as of the end of the relevant calendar or, if the account was closed during such year or period, the closure of the account

The totality of the information and its format are governed by a hugely detailed standard (Hence standard in the name), whose details are listed in a rulebook of hundred of pages

Reportable Accounts

OECD does not specify what is reportable—it allows the participating countries to determine what accounts are reportable. "The term “Reportable Account” means a [Jurisdiction A] Reportable Account or a [Jurisdiction B] Reportable Account, as the context requires, provided it has been identified as such pursuant to due diligence procedures, consistent with the Annex, in place in [Jurisdiction A] or [Jurisdiction B]."^[14]

This means that either jurisdiction may negotiate and determine its own reportable accounts in its agreement. For example, the United States, with its citizenship-based taxation, has established in its FATCA Intergovernmental Agreements that accounts held by US citizens and US Persons for Tax purposes in the other country's jurisdiction are required to be reported via FATCA.

Developing countries

Transparency groups have reacted in various ways to publication of the Standard, some of them with criticism involving the effects on developing countries.^[15] Rather than offer a period of non-reciprocity, where developing countries could simply receive financial data, the only mention of non-reciprocity agreements is catered to tax havens.^[15]

See also

• Foreign Account Tax Compliance Act (FATCA)

References

External links

• The Automatic Exchange of Information (AEOI) portal
• Reporting rules and standards
• List of 87 signatories that have an implementation date. with first exchange of information date as of November 2nd 2016. Along with starting dates of reporting