International tax reporting standards fighting tax evasion

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As a financial institution or an asset manager you are responsible for delivering a variety of different tax reports for different authorities. While national tax reporting practices apply, the trend has recently been towards a cross-border authority collaboration making tax reporting more internationally unified. In practice, everything is still going through the national tax authority, but the worldwide requirements for the scale and the form of reporting have increased. This development is driven by accelerating economic globalization, and increasing demands for transparency and responsibility in the financial industry.

In 2010, USA enacted the Foreign Account Tax Compliance Act (FATCA) which spread globally to the national requirements of tax reporting (see the full listing of the commitments here). Now the OECD countries have established their version of this regulation: Automatic Exchange of Information (AEOI). European Union is also participating this with the Directive of Administrative Cooperation (DAC2). More specifically, AEOI is delivered by a Common Reporting Standard (CRS) which is starting to roll out within this year. Countries are divided in two groups by the commitments, from which the early adopters group is implementing the CRS during 2017. Early adopters group consists of mainly the Western countries. See the full listing by jurisdiction here.

As an FA user, you shouldn’t be too afraid of the increasing regulatory requirements. CRS and FATCA reporting are additional extensions in the FA platform, and after a setup, it provides you the required XML files to pass on to your national tax authority. The complete integration between the FA platform and its modules and extensions opens the possibility for you to focus on the essentials – your core business – instead of filling in cumbersome reports.

 

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