The OECD’s Common Reporting Standard received further endorsement at the recent Global Forum meeting where 51 jurisdictions signed a multilateral competent authority agreement.
Following on from the recent G20 endorsement of the global standard for automatic exchange of tax information, 51 jurisdictions have now confirmed their commitment to automatic exchange by signing a multilateral competent authority agreement.
Over 50 jurisdictions have now indicated their commitment to introducing automatic exchange of financial information from September 2017, with others following in 2018.
In 2013, G20 Leaders invited the OECD to present proposals for a global model of automatic exchange. In response, the OECD released a Common Reporting Standard (CRS) which was formally endorsed by G20 finance ministers during the 22/23 February 2014 G20 meeting in Sydney, Australia.
In March 2014, 44 jurisdictions committed themselves to early adoption of the Common Reporting Standard. This early adopters group is committed to a timetable for implementation involving first exchange of information by the end of September 2017. In July 2014, a final consolidated version of the CRS was released including commentary and guidance for implementation and this version was endorsed by G20 Finance Ministers at the September 2014 meeting in Cairns.
The Common Reporting Standard (CRS) calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, 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.
Automatic exchange of information
The CRS has now moved a step closer to reality following the Global Forum on Transparency and Exchanges of Information for Tax Purposes meeting held on 28/29 October 2014 in Berlin. At this meeting, 51 jurisdictions signed a multilateral Competent Authority Agreement, designating the local authority that will be responsible for carrying out automatic exchange of information under the terms of the CRS.
A total of 89 jurisdictions have now committed themselves to reciprocal exchange of information on financial accounts on an automatic basis. An early adopters group had already committed to commencing exchanges from September 2017 and the number of jurisdictions indicating that they will commence automatic exchange by this date has now grown to 55. Most other jurisdictions will follow a year later, exchanging information from September 2018. In 2015, jurisdictions will be expected to present implementation plans to the Global Forum.
The United States, which is not part of the early adopters group nor a signatory to the multilateral agreement, has indicated that it will be undertaking automatic exchange pursuant to FATCA from 2015 under reciprocal Model 1 IGAs. Accordingly, the United States appears to take the view that it will not directly take part in the CRS process, but ensure its compliance with the spirit of the process through its FATCA commitments - though it might be noted that there are notable differences between US FATCA and the CRS and, in addition, any non-reciprocal Model 1 and Model 2 IGAs entered into with the US do not envisage reciprocal exchange.
The Global Forum will now establish a peer review process to ensure effective implementation of automatic exchange.
Exchange of information on request
With respect to on going peer reviews of jurisdictions’ compliance with exchange of information on request, it was agreed that the terms of reference will, in future, be expanded to include a requirement to maintain beneficial ownership information. This change will be applicable to any peer reviews carried out from 2016.
Currently, four jurisdictions remain non-compliant following the peer review process.
For more information, see our FATCA and BEPS microsites.
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