The Common Reporting Standards, or CRS, represents the global expansion to improve tax transparency and combat tax evasion. CRS, also referred to as the Automatic Exchange of Information for Tax Matters (AEOI), has been developed by the Organization for Economic Co-operation (“OECD”) working with G20 countries and the European Union (EU). The CRS currently has 94 countries that have agreed to participate in a reciprocal exchange of information about accounts held by individuals with a tax residency in a different jurisdiction.
- 58 1st Wave Adopters – 2017 data exchange reporting begins
- 36 2nd Wave Adopters – 2018 data exchange reporting begin
- 5 committed but without formally indicating a date
CRS is unlike FATCA and CDOT in that there is no legislative body overseeing the reporting requirement. Instead, the OECD has published a series of documents that drive recommendations about how to carry out reporting:
- CRS – Outlines the scope of information that will be required to be reported as well as the due diligence requirements for protecting this data.
- CRS Schema and User Guide – Provides a standardized approach for Financial Institutions (FIs) to transmit information electronically to Competent Authorities.
- CRS Commentary – Sets out detailed guidance on how to apply the CRS standards, CAA rules and shows examples.
- Model Competent Authority Agreement (MCAA) – Example of language to establish a basis that allows for the exchange of information between participating jurisdictions.
With no minimum thresholds, CRS ushers in a new level of global reporting transparency that will become the new reality for organizations to manage.