Common Reporting Standard start date fast approaching

The start date for the Common Reporting Standard (CRS) in early adopting countries is approaching fast, with financial institutions required to begin new account on-boarding procedures from 1 January 2016.

CRS requires financial institutions in participating jurisdictions to identify account holders who are tax resident in other participating jurisdictions and report their information on an annual basis to their local tax authority, for onward exchange to the tax authority in which the account holder is resident. CRS therefore has a much larger scope than the Foreign Account Tax Compliance Act (FATCA). In particular, CRS will require substantially increased reporting on a greater number of customers compared to FATCA, which focuses solely on US Specified Persons.

The benefit of CRS for tax authorities is the regular and timely reporting of information on tax residents in their jurisdiction who are account holders of financial institutions resident in other jurisdictions. This information will surely be a major weapon in tax authorities’ ongoing fight against cross-border tax fraud and tax evasion.