Common Reporting Standards

The Common Reporting Standard, 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.

The 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. 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)”, but “CRS is not just an extension of FATCA”. “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. A “private sector advocacy group that represents financial services and law firms” went even further in seeing a “showdown” between the two regimes.

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. 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.

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: a) the name, address, TIN and date and place of birth of each Reportable Person. b) the account number c) the name and identifying number of the Reporting Financial Institution; d) 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.

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].”

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.

The OECD has published detailed guidelines on the Common Reporting Standards at http://www.oecd.org/ctp/exchange-of-tax-information/automatic-exchange-financial-account-information-common-reporting-standard.pdf but the document is unreadable!!!

The MRA has published a document entitled “Implementation of the Common Reporting Standard for Automatic Exchange of Information” at http://www.mra.mu/download/CRS281015.pdf

The MRA is presently engaged in the drafting of Guidance Notes for the implementation of CRS. Draft Guidance Notes available at http://www.mra.mu/download/CRSGNDraftApr2016.pdf

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