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GFSI Tax: Tax transparency – Common Reporting Standard
HSBC recently published the HSBC Legacy Planning booklet in which interview comments from our National GFSI Tax Leader Patrick Yip and Tax Partner Candy Chan on the Common Reporting Standard (CRS) are featured.
CRS, the guidelines issued by the Organisation for Economic Co-operation and Development (OECD) in 2014 and effective in 2016, aims to establish a mechanism among jurisdictions for the information exchange on financial accounts, which currently covers over 100 countries and jurisdictions.
In the interview, Patrick and Candy discussed the concept of “Tax Residence” and the uncertainty around this concept under certain circumstances. "Tax residents of reportable jurisdictions" refer to those who are liable to tax by reason of residence in the jurisdictions. In general, whether or not an individual is a tax resident of a jurisdiction is determined by having regard to the person’s physical presence or stay in a place or, in the case of a company, the place of incorporation or the place where the central management and control of the entity is exercised. Citizenship is not a relevant factor for purposes of this determination.
Under the CRS guidelines, financial institutions are required to identify and report on those financial accounts held by tax residents of reportable jurisdictions or held by passive non-financial entities whose controlling persons are tax residents of reportable jurisdictions in accordance with due diligence procedures. Required information of these accounts include the account number, account balance or value (year-end), and the gross amount of interests, dividends and sale proceeds of financial assets as appropriate for the year concerned.
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