In 2016, the common reporting standard (CRS) became effective in over 50 participating jurisdictions, increasing to 96+ jurisdictions over the next two years. Staying abreast of the requirements as they emerge will be a substantial but necessary task.
The (CRS) is a regulation based on agreements between participating, or partner, jurisdictions which imposes requirements on financial institutions in one jurisdiction to identify and report financial data. This is data relating to the accounts they hold for tax residents of a partner jurisdiction, to their domestic tax authorities, who will in turn exchange that information with the tax authorities of that partner jurisdiction. Reporting under the CRS will begin in 2017, for the 2016 reporting year, precise arrangements are still to be determined.
With over 90 jurisdictions agreeing to participate the goal is to identify persons who may be evading tax in their country of residence by investing and earning income through financial institutions (FIs) in another jurisdiction. FIs are required to identify and report on all specified persons of each participating jurisdiction. Along with US FATCA and UK FATCA, these regimes are collectively known as Automatic Exchange Of Information (AEOI).