As of January 2018, banks in China and Hong Kong have begun sharing customer data with banking and tax authorities in more than 100 other countries. China has joined with other countries who have been cooperating with the data exchange program since its inception in 2014 and the years following.
In short, the program is a method of providing a Common Reporting Standard (CRS) for the transparency of persons or businesses holding financial accounts in multiple countries. The purpose is to provide an international defense again tax evasion.
At this point, the information exchanged annually includes each Reportable Person’s name, address, taxpayer ID number, date or birth, place of birth, account numbers, account balances, and where the client pays taxes.
The program was developed and initiated in 2014 but the Organization for Economic Co-operation and Development (OECD). Prior to 2014, participation in the exchange of this information was available only by request. Fifty-one countries were original signatories of the Multilateral Competent Authority Agreement to automatically exchange information at the end of an agreed-upon reporting period, typically the end of a calendar year.
The Automatic Exchange of Information (AEOI) is considered “today’s most stringent system of tax inspection.” Every country in which a person has a bank account participates in mutual and automatic exchange of personal tax information to determine in which countries a person should be taxed.
Certain individuals, depending on their native country, their country of residence, or countries where they do business may be liable for taxes in multiple countries. This practice is called being identified as a “tax resident.”
The scheme is intended to “provide timely information on non-compliance where tax has been evaded wither on an investment return or the underlying capital sum,” including “help detect cases of noncompliance even where tax administrations have had no previous indications of non-compliance.”
Financial institutions are required to report data from Depository Accounts, Custodial Accounts, Cash Value Insurance Contracts, Annuities, among other items.
Investors, business people, and foreign nationals should be aware of these changes and if appropriate seek additional information and advice. American Corporate Services, Inc. is available to assist and respond to your questions. Contact us at www.usa-acs.com for more information.
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Meta Description: China has joined with more than 100 other countries to cooperate under the Common Reporting Standard and Automatic Exchange of Information agreements to share account-holder data with financial entities in those countries.
Keywords: Common Reporting Standard, Automatic Exchange of Information, Organization for Economic Co-operation and Development, Multilateral Competent Authority Agreement, tax resident, CRS, AEOI, OECD.
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