What is the Common Reporting Standard? Common Reporting Standard Assessment

About CRS

CRS is the abbreviation of Common Reporting Standard, which is translated into Chinese as “Uniform Reporting Standard”. It was proposed by the Organization for Economic Cooperation and Development, also known as OECD.

Two years ago, the OECD proposed guidelines in Australia to guide participating jurisdictions to regularly exchange information on financial accounts of tax residents, aiming to improve tax transparency and combat tax evasion through strengthening global tax cooperation.

To give a simple example, if a Chinese person goes to the UK one day and deposits a considerable amount of money, then the British bank will be obliged to disclose the amount of the Chinese person's deposit to the State Administration of Taxation of China. This is information exchange.

The first country on the planet that wanted to exchange information was actually the United States. The United States began to promote the principle of information exchange in 2010, which was its Foreign Account Tax Compliance Act (FATCA), which the Taiwanese translated as the Fat Cat Act. The United States pushed it very hard, but it was very effective. For example, the United States first found Switzerland, and Switzerland disclosed all American deposit information to the United States, helping the United States collect a large amount of taxes. So the United States required all countries in the market to sign information exchange rules with it. The United States did a good job, and OECD member countries also began to follow suit.

The Common Reporting Standard aims to promote the automatic exchange of tax information between countries and is being implemented in various countries step by step, and is expected to fully cover all member countries in 2018. Although it is not a legally binding model, the OECD, the organization that initiated the CRS, advocates that all member countries should sign an agreement on the exchange of citizen information in accordance with the requirements.

What information will be exchanged

• Covered overseas institutional accounts: Almost all overseas financial institutions, including banks, trusts, securities firms, law firms, accounting firms, investment entities that provide various financial investment products, specific insurance institutions, etc.

• Covered asset information: deposit accounts, custody accounts, funds with cash or insurance contracts, annuity contracts, all must be exchanged.

• Personal information covered: Your account, account balance, name, date of birth, age, gender, and place of residence will all be exchanged.

CRS and China

China committed to implement AEOI (Standard for Automatic Exchange of Financial Account Information in Tax Matters) as early as September 2014.

In December 2015, China officially signed the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information in Tax Matters.

On January 1, 2017, the transformation of the new customer account opening process was completed. For new account opening customers after January 1, 2017, non-resident accounts can be identified through due diligence procedures.

Before December 31, 2017, complete the due diligence procedures for existing high-net-worth individual customers (the total balance of financial accounts on December 31, 2016 is greater than US$1 million) and identify non-resident accounts among them.

The first information submission to the State Administration of Taxation will be completed before June 30, 2018 (estimated), and information will be submitted to the State Administration of Taxation regularly every year in the following years.

Before September 30, 2018, China will complete the first inter-jurisdictional information exchange with other jurisdictions participating in the CRS, and will also conduct inter-jurisdictional information exchange regularly every year in the following years.

Before December 31, 2018, complete the due diligence procedures for all remaining existing customers and identify non-resident accounts among them.

References