This year’s reporting season which, considering the COVID-19 pandemic, might have been challenging for many of us, is coming to an end. It is advisable to use the coming months to review existing processes relating to CRS reporting.
This year’s reporting season which, considering the COVID-19 pandemic, might have been challenging for many of us, is coming to an end. But just like in sports, after season is pre-season. It is time for a look-back and outlook. What we mean to say with this is that we encourage everyone who is responsible for CRS reporting to use the coming months to evaluate the past reporting season and prepare for the upcoming reporting season.
Learn from experience
It is advisable to use the coming months to review existing processes relating to CRS reporting. Ask yourself, for example, the following questions:
- Were all financial institutions registered in time?
- Was all the reporting relevant information available as required and on time?
- Was all the reporting relevant information submitted to the authorities in a timely and accurate manner?
- Did you manage to keep an overview of your client population and the jurisdiction-specific deadlines and reporting requirements?
- Are your due diligence and reporting processes clearly defined and documented in a suitable manner?
If you detect inefficiencies or insufficiencies, now is a good time to consider making amendments in order to enhance processes and ensure a smoother reporting season next year.
Stay on top of new developments
The OECD has already in 2019 published a new CRS XML schema (version 2.0) and an updated User Guide (version 3.0) which will both be in use as from 1 February 2021 (both available here). The user guide reflects a number of technical changes which have been made to the new XML schema, following input from jurisdictions and financial institutions using the schema. Most of the changes relate to the use of the Message Reference ID, the indicator for the message type and the length of string elements. Make sure to analyse the changes and implement the new XML schema to your reporting generating process.
In addition, be sure to keep check on OECDs status of commitments overview. Commitments to implement the AEOI Standard continues to be made by developing countries not originally invited to commit. Albania, Ecuador and Maldives, for example, will be undertaking first exchanges by 2021. Morocco, Jordan, Montenegro and Thailand belong to the group of jurisdictions which also voluntarily committed to implement the AEOI Standard – the first exchanges are expected by 2022 and 2023. Another 46 developing countries which are not hosting financial centres and have not been asked to commit have nevertheless signaled their commitment but not yet set a date for a first exchange.
Information about activated exchange agreements can be tracked via the OECDs overview of exchange relationships. We however recommend going straight to the source by visiting the website of the relevant local tax authority if you would like to find out more details about the exchange relationships concerning a specific jurisdiction.
Lastly, we would like to draw attention to the topic of confidentiality and data protection – which is not only an issue particularly in the developing countries that have committed voluntarily at a later stage but also in a few of the jurisdictions that already have a network of active exchange agreements with other states. Partner jurisdictions are not expected to send information to a jurisdiction that do not have the necessary confidentiality and data safeguard standards in place. Jurisdictions therefore undergo several assessments (pre and post exchange) conducted by the Global Forum to determine whether the respective standards are met. This means that certain jurisdictions that have committed and possibly entered into exchange agreements with other jurisdictions may not expect to receive information until relevant measures have been taken. Also, an already activate information exchange with a jurisdiction where a breach is later detected can be suspended until the identified issues are resolved.
Do you need help reviewing your CRS due diligence and reporting obligations and procedures? Please do not hesitate to contact our CRS experts.