Case studies

Technology helps answer call for greater tax transparency

Using technology with Dun & Bradstreet to help companies fulfil new reporting obligations

The increasing use of online advice (so-called ‘robo advisers’) in the financial industry has yet to make a sizable dent in the role of the tax adviser. But there can be huge benefits to clients and the capital markets when you combine the latest technology with human expertise. To this end, our tax practice has been using technology to support clients in fulfilling new reporting obligations, helping improve tax transparency at an international level.

Amid increasing calls across politics and media for greater transparency of the tax affairs of companies and individuals, the Organisation for Economic Co-operation and Development and G20 introduced an Automatic Exchange of Information (AEOI) regime - the Common Reporting Standard (CRS). Over 100 countries have signed up to CRS, and the regime went live in the UK on 1 January 2016. It will be implemented in all committed countries by 1 January 2017.

CRS requires financial institutions such as banks, asset managers and life insurers to broadly report details of their overseas clients to tax authorities - classifying their entire customer bases as reportable or not. Given the number of customers can run into the hundreds of thousands, this presents financial institutions with the twin challenges of gathering the appropriate information and ensuring they report it accurately. We could see AEOI was going to create a huge compliance burden, and knew that simply asking customers to fill in self-certification forms would create a logistical headache and be unlikely to succeed.

So we arranged a meeting with Dun & Bradstreet, the leading supplier of publicly available information, to explore how we could work together to ensure clients were complying with this important regime. We provided the technical rules to support the development of a classification tool that allows financial institutions to use publicly available information to determine whether their clients are reportable without the need to contact them directly. As a result, financial institutions can significantly reduce the time and resources taken in classifying their clients. More importantly, they can be confident they’re playing their part in improving tax transparency by providing the correct information to tax authorities.

This tool is up and running, and has already provided well in excess of 100,000 customer classifications to a variety of financial institutions.

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