The OECD (Organisation for Economic Co-operation and Development) Common Reporting Standard (CRS) is a big step towards a globally coordinated approach to disclosure of income earned by individuals and organizations.
This report looks at the impact of CRS and the influence these new Standards have upon financial institutions around the world, and considers the steps financial institutions should take to achieve compliance cost-effectively. Although automatic exchange of information (AEoI) is not new, it is only recently that the push has become more global in scope which is acting to change the business landscape.
KPMG's Global Financial Services (FS) Tax practice new report titled “Automatic Exchange of Information: The Common Reporting Standard,” looks at the impact of CRS and the influence these new Standards have upon financial institutions around the world, and considers the steps financial institutions should take to achieve compliance cost-effectively.
Here is an outline of the key issues examined in the publication:
These initiatives involve governments obtaining information from their financial institutions and exchanging data automatically with other nations. Financial institutions (and other investment entities) will have significant additional reporting responsibilities, which may vary in format and timing from jurisdiction to jurisdiction, with potential penalties for those unable or unwilling to comply fully.
Financial institutions will need to collect account holder status and tax residency, which may differ from FATCA, and use that information to drive the gathering and reporting of interest, dividends, account balance, income from certain insurance products, and sales proceeds from financial assets for certain non-resident account holders.
Financial institutions need to keep abreast of new regulations around the world, manage relationships with multiple tax authorities, and educate staff and clients on reporting requirements and account opening procedures.
FATCA is much narrower in scope than the CRS. The lack of account balance thresholds for reviewing account holders and the expansion of those financial institutions subject to the CRS, together with the search for non-resident account holders from more than 40 jurisdictions, makes the scale of the CRS a multiple of what it was for FATCA. This is especially true for those financial institutions that took a tactical approach to their FATCA solution, either by creating temporary manual processes or by excluding US persons.
© 2020 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.
KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. For more detail about our structure please visit https://home.kpmg/governance.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.