What is the Common Reporting Standard (CRS)?
The CRS requires financial institutions and entities to identify and report certain information about their account holders to the tax authorities in the jurisdiction where the account holder is a resident. The reported information includes the account holder’s name, address, and tax identification number, as well as the account balance and any income generated by the account.
The CRS applies to a wide range of financial institutions, including banks, custodial institutions, certain types of investment entities, and specified insurance companies. Financial institutions are also required to conduct due diligence procedures to identify their account holders and report any suspicious transactions.
The CRS is based on the principle of reciprocity, which means that participating jurisdictions agree to exchange information automatically with each other on an annual basis. To date, over 100 jurisdictions have committed to implement the CRS and are in various stages of implementation.
The CRS is a powerful tool in the fight against tax evasion and helps tax authorities to identify and recover unpaid taxes. It also promotes greater transparency and fairness.