Common Reporting Standard - A work in progress requiring reactivity
“I really do think that on the international, on the global level, we have to fight all together against tax evasion“. Jean-Claude Juncker’s declaration last November at the G20 summit in Brisbane reflects a clear step-up in the global move towards more transparency in tax matters.
Since FATCA in 2010, the momentum for implementing the new automatic exchange of information has grown and the financial industry is increasingly acting as a data facilitator for tax administrations.
New regulations have been issued, new frameworks designed, technical systems have been implemented and financial institutions are often forced to comply in a short order with these new requirements.
As a matter of principle, FATCA forces financial institutions to disclose their U.S. clients (and clients assumed to be U.S. clients) to the Internal Revenue Service. To ensure a high degree of participation, financial institutions refusing to comply would be categorised as ‘Non-Participating Foreign Financial Institutions’ and sanctioned with a punitive 30% withholding tax on U.S.-sourced income and gross sales proceeds of assets producing U.S.- sourced income.
Inside magazine issue 8, April 2015
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