To help fight against tax evasion and protect the integrity of tax systems, governments around the world have followed the United States government’s introduction of FATCA by introducing a new information-gathering and reporting requirement for financial institutions. This is known as the Common Reporting Standard (the CRS) and it has been developed by the Organisation for Economic Co-operation and Development.
The Common Reporting Standard (CRS) is the standard for the Automatic Exchange of Information (AEOI) developed by the Organisation for Economic Co-operation and Development (OECD). It is a new reporting and information-gathering requirement for financial institutions in participating countries, to help fight against tax evasion and protect the integrity of tax systems.
The main purpose of the CRS is to combat the offshore tax evasion and to provide minimum set of standards and framework to increase efficiency and decrease cost associated with exchange of information. Local Financial Institutions report CRS specific information to their Competent Tax Authority, who in turn exchange this information with the respective Competent Authorities of the Participating Jurisdictions with which they have an agreement in place.
The CRS regulation generally applies to any Financial Institution (FI) located in a CRS participating jurisdiction and obliges those Financial Institutions to identify tax residency of account holders. CRS applies to both individuals and entities. An up to date list of the countries that have either signed or committed to adopt CRS can be found on the OECD’s site at: http://www.oecd.org/tax/transparency/AEOI-commitments.pdf
The CRS seeks to establish the tax residency of customers. Under the CRS, financial institutions are required to identify customers who are tax resident in foreign jurisdictions i.e. outside of the country where they hold their accounts and products, and report certain information to the national tax authority
As required under national laws implementing the CRS, it is required to provide information to the tax authority of the country where the reportable account is held by a reportable person. The information you provide is only shared in reports to the relevant tax authorities.