There has been a recent development in the evolution of global information reporting and the Common Reporting Standard (CRS) reporting requirements. On August 7, 2015, the OECD (Organization for Economic Co-operation and Development) released the first version of a CRS Implementation Handbook, which is meant to provide practical guidance to assist government officials and financial institutions (FI’s) when it comes to the necessary steps for implementing CRS.
This guide encourages FI’s and government officials to:
- Consistently use the optional provisions available and outlined
- Identify areas for alignment with FATCA
- How to address operational and transitional challenges resulting from the staggered implementation of CRS
The CRS will require jurisdictions to obtain information from their financial institutions about accounts based on foreign tax residency and automatically exchange that information with other jurisdictions on an annual basis. Currently, over 90 jurisdictions have committed to implement CRS, with the first exchanges set to begin in 2017 and 2018. However, first each jurisdiction still must adopt necessary legislative procedures and requirements that state how and what data FI’s must submit to comply with their reporting obligations.
Since there is limited time left until the automatic exchange of information (AEOI) under CRS becomes a reality, it is crucial that FI’s update their systems to prepare for this new reporting regime.