10 Important Points You Need To Know About Common Reporting Standards ( CRS ) If You Do Not Want To Be Caught Evading Tax By Your Country’s Tax Authority!
1. Singapore has committed to implement the CRS, with the first exchange to take place by September 2018.
2. The CRS is an internationally agreed standard for the automatic exchange of financial account information (“AEOI”), endorsed by the OECD and the Global Forum for Transparency and Exchange of Information for Tax Purposes, to deter and detect tax evasion through the use of offshore bank accounts.
3. More than 100 jurisdictions, including major financial centres such as Hong Kong, Luxembourg and Switzerland, have endorsed the CRS and will commence AEOI in either 2017 or 2018.
4. Automatic exchange of information (“AEOI”) based on the CRS refers to the regular exchange of financial account information between jurisdictions for tax purposes, with the objective of detecting and deterring tax evasion by taxpayers through the use of offshore bank accounts.
5. The CRS builds on the FATCA reporting regime to maximise efficiency and reduce costs for implementing jurisdictions and their FIs.
6. The CRS sets out the financial account information to be exchanged, the financial institutions (“FIs”) required to report, the different types of accounts and taxpayers covered, as well as the customer due diligence procedures to be followed by FIs.
7. The CRS Regulations empower and require all financial institutions (“FIs”) to put in place necessary processes and systems to obtain CRS information from account holders that open a new account with the FIs from 1 January 2017.
CRS Regulations
The Income Tax (International Tax Compliance Agreements) (Common Reporting Standard) Regulations 2016 (“CRS Regulations”) incorporate the requirements of the CRS into Singapore’s domestic legislative framework. The CRS Regulations has entered into force on 1 January 2017.
Please note :
Singapore has adopted the “wider approach”, which means that FIs will need to collect and retain the CRS information for all account holders and where the account holder is a Passive NFE (Non Financial Entity), the controlling persons of the Passive NFE in the case of new accounts, instead of only for account holders and controlling persons who are tax residents of Singapore’s CAA partners. For CRS reporting purposes, SGFIs will need to transmit to IRAS the financial account information relating to tax residents of Singapore’s CAA partners from 2018. IRAS will subsequently exchange the reported information with Singapore’s CAA partners.
8. FIs will have to establish the tax residency status of all their account holders using the information they have and transmit to the Inland Revenue Authority of Singapore (“IRAS”) in 2018 the CRS information of account holders that are tax residents of jurisdictions that Singapore has a Competent Authority Agreement (“CAA”) for CRS with.
9. The trick is to establish Tax residency in Singapore, one of the countries of lowest tax rate in the world.
10. Competent Authority Agreement (“CAA”)
* A CAA enables the implementation of the information exchange based on existing tax information exchange agreement or a bilateral tax treaty.
* A CAA specifies the type of information to be exchanged between two jurisdictions, the time and manner of exchange as well as the confidentiality and data safeguards to be respected for the exchange of information.
* Singapore has signed CAA with about 20 countries in the short span of 4 months between Jan and Apr 2017.
As of 7 August 2017, exchange relationships under the CRS MCAA (Multilateral CAA for CRS) have been activated with the following jurisdictions: Belgium, Brazil, Bulgaria, Canada, Cyprus, Faroe Islands, Gibraltar, Greece, Guernsey, India, Indonesia, Isle of Man, Jersey, Luxembourg, Mexico, Portugal, Slovak Republic, Spain, Uruguay.
Welcome any queries below, if any. I assume most of the queries will be on point number 9.
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