By the time the year ends, 22 countries in the Americas would have exchanged financial information in tax matters with other participant countries. Here we give you a quick overview on what the Common Reporting Standards are, and a list of the first reporting deadlines for Early Adopter jurisdictions in the region.
Being at the forefront of international regulations is not easy, but if you are a compliance expert or international CFO, Common Reporting Standards or CRS should be at the top of your priorities list.
The Common Reporting Standard (CRS), approved by the OECD Council on 15 July 2014, sets the Standard for Automatic Exchange of Financial Account Information in Tax Matters that has arisen out of international agreements between governments, tax authorities and global organisations. It gives legal basis for the exchange of tax data among participating jurisdictions and requires financial institutions to perform specific due diligence procedures to collect and transmit financial data on their customers. Basically, at some point all countries that singed CRS agreements, will implement there rule in their laws and automatically exchange financial data on reportable accounts.
What countries are participating?
There are two groups of countries that have signed onto CRS. The “early adopters”, which are countries that will perform a first exchange of information with other participating countries in 2017; and the “late adopters”, or countries who will start exchanging information from the 2017 calendar year, in September of 2018. Here is a list of the Americas countries in each group:
Click here to view table.
It is important to note that Curacao was originally listed as early adopter, but moved to the late adopter lists, with CRS first reporting deadline on 31 March 2018.
Unique to the British Virgin Islands and the Cayman Islands is that these two countries have introduced a requirement for Reportable Financial Institutions (RFI) to register with their respective local competent authorities for CRS purposes. RFI registration deadline for both countries is on 30 June 2017.
Below we list the deadlines for Early Adopters’ first reporting:
Click here to view table.
**Exact date depends on end digit of the entity's NIT number, as per Resolution 000119 of 30 Nov 2015
*Extension of deadline is under consideration
What should companies do?
If your entities (subsidiary, branch, trust, foundation etc.) are established in or are, otherwise, tax resident in any of the above countries, you should first of all assess your entities to determine their CRS status.
CRS requires that all entities in participating jurisdictions be classified for CRS purposes, and depending on the classification outcome, a process of due diligence in line with specific criteria defined by CRS will have to be performed in order to establish if reporting is required and what needs to be reported. The outcome of this CRS classification may be that your entity is a "Reporting Financial Institution", a "Non-Reporting Financial Institution", "Active Non-Financial Entity (NFE)" or a "Passive NFE".