On 21 July 2014, the Organisation for Economic Cooperation and Development ("OECD") released the full version of the Standard for Automatic Exchange of Financial Account Information in Tax Matters ("the Standard"), which was approved by the OECD Council on 15 July 2014. The Standard calls on governments to obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis. The Standard sets out the scopes of financial information to be reported, the financial institutions that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions. In addition, the OECD has recently published the first edition of the Common Reporting Standard ("CRS") Implementation Handbook in August 2015 to provide practical guidance to assist government officials in the implementation of the Standard.
In this tax flash, we aim to provide you with updates and summarize the key points of the Standard.
1. STANDARD FOR AUTOMATIC EXCHANGE OF FINANCIAL ACCOUNT INFORMATION
Under the Standard, jurisdictions would obtain financial information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. The Standard consists of two components:
a) Common Reporting and Due Diligence Standards (CRS); and
b) The Model Competent Authority Agreement (CAA).
The CRS contains the reporting and due diligence rules designed with a broad scope across three dimensions:
- The financial information to be reported, including balances, interest, dividends, sales proceeds from financial assets;
- The financial institutions that need to report, including banks, custodians, brokers, certain collective investment vehicles and certain insurance companies; and
- Types of accounts and taxpayers covered, including accounts held by individuals and entities (covering trusts and foundations).
The Model CAA contains the detailed rules on the exchange of information dealing with definitions, covering the types of information to be exchanged, the time and manner of exchange and the confidentiality and data safeguards that must be respected.
Please find more details of the Standard in the link below:
As of 4 June 2015, 61 jurisdictions signed the first ever multilateral CAA to automatically exchange information under the Standard. In addition, over 90 jurisdictions have expressed their commitment to implement the Standard based on specific timetables by 2017 or 2018 as follows: http://app.rspread.com/Spread5/SpreaderFiles/13184/files/upload/TaxNewsletter-Standard%20for%20Automatic%20Exchange(OECD)-Sep15.pdf
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.