The all new, global, Common Reporting Standard
In July 2014, the Organization for Economic Cooperation and Development (OECD) released the new global ‘standard’ for the automatic exchange of information between offshore and onshore jurisdictions – known as the Common Reporting Standard (CRS).
The CRS reach is truly global and over 100 countries have publically committed to adopting the new reporting standard. These also include most offshore havens such as BVI, Cayman Islands, Isle of Man and Jersey. Information sharing is expected to commence from 2017.
The CRS broadly aims to obtain financial information directly from the reporting financial institutions (FIs) which includes information related to all reportable accounts and also the personal data of the account holders. The information that is to be exchanged covers interests, dividends earned, account balances, income from insurance and sales proceeds from financial assets. It is also mandatory for personal data of account holders to be released, which includes, name, address, residence, tax identification number and place of birth.
The emphasis is on a single global standard platform for the automatic exchange of information and the OECD is focused on the creation of consistency in the guidelines. It is expected to include a Competent Authority (CA) Agreement that is likely to be used by the respective governments to reach an agreement on the provisions of the CRS. The CA will help enforce domestic tax laws and treaties.
The privacy of tax payers will be impacted and they may need to keep check on how this change may affect them in terms of confidentiality. Focus will also be on tax payers with offshore assets as the CRS aims at submission of voluntary disclosure as the only option.
Clients and advisors should act now to discuss any changes to existing and new offshore structures.