Analysis of the Common Reporting Standard Loopholes

Analysis of Common Reporting Standard Loopholes

Website updated 22.09.2018
CRS Times Newsletters replace all the topics on the side, so I encourage you to read them. Send me topics you wish me to cover. Password protection is removed. Issue 19 and 20 published soon. EU Parliament overwhelmingly votes for a resolution to suspend FATCAs Intergovermental Agreements due to the non reciprocity of receiving info from the USA.

Latest Questions Sent by Readers. Dozens of such issues are answered in CRS TIMES
1.	Investment Entity failing income test: If a collective investment has not earned anything since inception, will the fund qualify as an Investment Entity or is it a Passive NFE becauyse it fails the income test?
2.	Interest as Active Income: Is interest earned by a microfinance business passive income or active income.
3.	Ignoring OECD closure of loopholes via FAQ: OECD closes a CRS loophole via FAQ updates, e.g. segregated savings plans, irrevocable insurance. Can domestic law non reporting FI ignore this if the jurisdiction where FI is based does not refer to the FAQ and Implementation Handbook as being legislation to follow.
4.	Holding FIs as Active NFE: As corporate trustee, can we categorize our trust as an Active NFEs if the trust holds subsidiaries engaged in business.
5.	Entity with dual tax residency: How do we treat entity account holders which have dual residencies due to place of incorporation and different place of effective management. Where is such entity located as an investment entity.
6.	Fake residency: How will OECD oblige FIs to determine genuine tax residence of individuals, to address their concerns on abuse of residence by investment (RbI) by black listed jurisdiction such as UAE, Malta, St. Kitts, etc. Will utility bills from RbI black-listed jurisdictions no longer be used for due diligence.
7.	Intangible assets in balance sheet:, can an NFE load their balance sheet with intangible assets, such as IP, to pass the asset test as an Active NFE type [A] business, assuming they earn non-financial income such as commissions.

OECD Publications on CRS
Common Reporting Standard and Commentary	Second edition of Implementation Handbook provides new guidance related to effective implementation.	CRS-related Frequently Asked Questions	List of jurisdictions committing to CRS by 2020, including developing members of Global Transparency Forum but not yet set the date for automatic exchange.
List of signatories of the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information and intended Information Exchange Date.	Pascal Saint Amans quoted that the Model Disclosure Rules will be submitted to the G7 presidency and are part of a wider strategy of the OECD to monitor and act upon tendencies in the market that try to avoid CRS reporting and hide assets offshore.	Mandatory Disclosure Rules on avoidance of CRS	List of members of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes.
List by jurisdiction of specific the steps taken and choices made in the context of implementing the Standard.	Definition of tax residency rules for individuals and entities by jurisdiction. Breakdown of updates by country	CRS Guidance by Jurisdictionas per OECD AEoI Exchange Portal. Not yet updated by OECD	Tax Identification Number rules and formats by Jurisdiction as per OECD AEoI Exchange Portal.

Newsworthy Updates

20 September 2018 * Update 153 members of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes
14 September 2018 * Update format of Tax Identification Numbers by jurisdiction
7 August 2018 * Update 103 signatories of the Multilateral Competent Authority Agreement
5 July 2018 * EU votes for a resolution for EU Members to suspend FATCA due to non reciprocity
15 June 2018 * OECD updates list of 106 jurisdictions committed to CRS and 43 Global Forum Members but not yet set date to implement automatic exchange of Financial Account Information
4 June 2018 CRS FAQ update closes loopholes concerning Hong Kong ORSO, Gibraltar QNUPS and other trust-based retirement funds, as well as irrevocable insurance.
31 May 2018 * EU Commission Director General Taxation warns USA will be blacklisted in 2019 if it does not adopt CRS. Three out of seven blacklisted nations are US territories
25 May 2018 * EU Council updates uncooperative tax havens list - blacklists 7 and greylists 65 jurisdictions
19 April 2018 * OECD publishes feedback on abuse of residence consultation
17 April 2018 * OECD publishes Public Comments on Consultation on abuse of residence by investment schemes.
6 April 2018 * 2nd OECD CRS Implementation Handbook
29 March 2018 * Determine tax residences based on Centre of vital Interest
13 March 2018 * EU Council amends Mutual Assistance and Cooperation Directive (DAC) to include OECD MDR for addressing CRS avoidance arrangements and offshore structures (see pg. 38).
10 March 2018 * OECD releases final Mandatory Disclosure Rules
9 March 2018 * OECD FAQ on Mandatory Disclosure Rules.