Taxpayers with offshore assets as well as financial institutions that hold them and governments/ tax authorities will all face new challenges under the OECD’s updated Common Reporting Standard (CRS) of 21 July 2014.
The CRS, formally the Standard for Automatic Exchange of Financial Account Information in Tax Matters, seeks to establish a global methodology for the sharing amongst tax authorities of relevant data in relation to financial assets. The transparency created by the CRS is meant to be yet another deterrent to taxpayers’ use of offshore financial accounts, assets, etc. to avoid domestic tax liabilities. Reporting by more than 40 ‘early-adopter’ jurisdictions will see the first exchanges of information with respect to new and high value pre-existing accounts by the end of September 2017 and with respect to other pre-existing accounts by the end of September 2018.
Banks and other financial institutions will face a challenge in implementing appropriate compliance programs to carry out due diligence and provide the necessary data in the right form by the agreed deadlines.