In a world where cross-border activities and globalised business has become the status quo, it is imperative that countries respective tax authorities work together to ensure that the right amounts of tax are being paid to the right jurisdictions. As big business continues to boom, corporate tax has been placed under intense scrutiny by the world’s press, and governments and NGOs have been pressured to create the necessary administrative, legal and IT tools in order to ensure taxpayers are abiding by the law.
The Common Reporting Standard (CRS) was developed by OECD in 2014 as a response from a G20 request to provide a framework to facilitate the automatic exchange of information between various financial institutions on a cross-border basis. The exchange of information is done annually and provides each respective jurisdiction with up to date and comprehensive information on revenue, tax paid and other fiscal responsibilities.
This week, the OECD announced that over 1000 relationships in 101 jurisdictions are now in place and an update on these numbers is expected before the end of 2015 before continuing on a periodic basis. With a year to go until the first exchanges of information take place, it is expected that more jurisdictions will nominate the partners they will undertake automatic exchanges with, and this number will increase significantly.
Today’s news is an important step towards the OECD-developed cross-border standard for the automatic exchange of financial account information and is an indicator of the commitment which multiple international jurisdictions have, to filling their political commitments to fight international tax evasion.