The Common Reporting Standard
Email: 2355725105@qq.com Hotline: 86-13530066130
The Common Reporting Standard (CRS) was developed in response to the G20 request which was the result of a series of meetings between G20 finance ministers and central bank governors to discuss tax avoidance in 2014. On the 15th of July 2014, the Organisation for Economic Co-operation and Development’s (OECD) council approved the Common reporting standards.
The CRS calls on countries governments to acquire information from their financial institutions and automatically exchange that information with other countries governments on an annual basis.It specifies what financial account information is required to be exchanged, which financial institutions are required to report, the different types of accounts are covered, the different types of taxpayers are covered and sets out common due diligence procedures to be followed by financial institutions.
History of the Common Reporting Standards
Since the world has become more globalised it has become much easier for all tax paying individuals and companies to make, hold and manage investments through financial institutions outside of their country of residence. This allows vast amounts of money to be kept offshore in order to avoid paying tax in their home Country.
Offshore tax avoidance is a serious issue for many countries all over the world. Many countries have a shared interest in tracking derogatory tax avoidance and maintaining the integrity of their tax systems. In order to reduce tax evasion, Governments would need to rely on co-operation between theirs and other governments tax administrations and a key aspect of this would be the exchange of financial information between them.
The opportunities presented by the automated exchange of information became a key political interest in 2012.On the 19th of April 2013, the G20 finance ministers and central bank governors endorsed automatic exchange as the expected new standard. This decision was made after France, Germany, Spain, Italy and the United Kingdom announced their intention to develop and pilot multilateral tax information exchange based on the Model Intergovernmental Agreement to Improve International Tax Compliance and to implement the Foreign Account Tax Compliance Act, developed between these countries.
On the 22nd of May 2013, the European council unanimously agreed to prioritise efforts to extend the automatic exchange at EU and global level and welcome the on-going efforts made in the G8, G20 and by the OECD to develop a global standard.
On the 19th of June 2013, the G8 leaders approved the OECD Secretary General’s report ‘A Step Change in Tax Transparency’ which sets the concrete steps that need to be undertaken to put a global model of automatic exchange into practice. On the 6th of September 2014, the G20 leaders committed to the automatic exchange of information being the new global standard and supported the OECD’s work with G20 countries to present a single global standard in 2014.
Ultimately, in February 2014, the G20 finance ministers and central bank governors endorsed the Common Reporting Standard for the automatic exchange of tax information and by May 2014, over 60 countries had committed to swiftly implementing the Common Reporting Standard and integrating it into their domestic law and an additional 44 countries also agreed to a common time in the future to implement the standard.
China’s adoption of the Common Reporting Standards
Being a G20 member, China has consistently supported the OECD’s initiatives for the automatic exchange of information to combat cross border tax evasion and improve tax transparency. In December 2015, China’s State Administration of Taxation signed the Multilateral Competent Authority Agreement which allowed it to progress with the automatic exchange of information as advocated by the OECD’s Common Reporting Standard.
On the 19th of May 2017, the Administration of Taxation, Ministry of Finance, Peoples Bank of China and the China Insurance Regulatory Commission jointly announced and issued the administrative measures for due diligence on non-resident financial account information, in line with the market expectations and the OECD’s global Common Reporting standardwhich was to come into effect on the 1st of July 2017.
These measures were the legal framework for the implementation for the automatic exchange of information in China and require financial institutions to comply with the due diligence procedures advocated by the measures to identify the tax residency of financial account holders and to collect and record the information all reportable information.
Contact Us
For more details, please contact us by calling 86-13630066130 and 86-755-82143410, or email to 2355725105@qq.com.