||1.||The OECD will likely amend the CRS in 2017 so that untaxed entities cannot be categorised as Active NFEs. This is because it is assumed that owners of these entities merge their private investments with the business of the entity. The EU savings tax included any legaö entity or arrangement that was effectively untaxed. This means shippers who use say Marshall Island entities will now be reportable.||2.||
How the redaction of untaxed entities from being an active NFE will affect shippers
Assume, Greek resident shipper has his shipping company in the Marshall Islands, which does not effectively tax the company income. Tax on gross tonnage is irrelevant. The company owns ships worth $500m. The company earns $50m in shipping profits.
Assume the profits are is invested, earning $2m a year. When CRS is amended, an untaxed entity cannot be an active NFE. Consequently this shipping company in Marshall islands will be a passive NFE. The Financial Institutions maintaining the cash / invetments will look-through the shipping company to the controlling persons, viz. the Greek resident owner. The FI will subsequetly report to Greece that the shipping company owned by the Greek resident: