Nigeria Signs Off On Common Reporting Standard With OECD
As we await official communication, information reaching us have it that Nigeria has signed off on the Common Reporting Standard (CRS) with the Organisation for Economic Co-operation and Development (OECD).
As publicly stated on Wikipedia, ‘The Common Reporting Standard (CRS) is an information standard for the Automatic Exchange Of Information (AEOI) regarding bank accounts on a global level, between tax authorities, which the Organisation for Economic Co-operation and Development (OECD) developed in 2014.
Its purpose is to combat tax evasion. The idea was based on the US Foreign Account Tax Compliance Act (FATCA) implementation agreements and its legal basis is the Convention on Mutual Administrative Assistance in Tax Matters.
Ninety-seven (97) countries had signed an agreement to implement it, with more countries intending to sign later. First reporting occurred in 2017, with many of the rest starting in 2018.’’
In an article titled : ‘Obligations and Penalties Under the Common Reporting Standard, it was stated that ‘under the CRS, tax authorities from countries adopting the standard must obtain financial-account information from their financial institutions and automatically share that information with other countries each year.
As the name implies, the Common Reporting Standard dictates the specific financial information that must be collected and exchanged, what types of financial institutions are involved, and the kinds of accounts and account holders that are covered’.
The “financial institutions covered by the standard include custodial institutions, depository institutions, investment entities and specified insurance companies.”
The institutions are required to perform due diligence to identify reportable accounts. Reportable accounts include those accounts held by individuals and by entities (including foundations and trusts).
Specific financial information subject to collection and reporting under the CRS includes:
- Account balance or value
- Income from certain insurance products
- Sales proceeds from financial assets
- Other income generated with respect to assets held in the account or payments made with respect to the account.
Impacts and Implications
The potential impacts and implications of this signing are among the following but not limited;
- Tax evasion will be reduced and eliminated.
- It will bring about the automatic exchanges of information by different countries/jurisdictions when necessary.
- Countries will now have better access to the details of the offshore wealth held in partner jurisdictions.
- Historical non-compliance with tax laws will become easily visible.
According to the information available on the OECD Automatic Exchange Portal which show the list of countries adopting the CRS, Nigeria has committed to the first exchange in 2019.