STEP sits on the HMRC consultative group on the OECD Common Reporting Standard (CRS) and has provided guidance to STEP members on their obligations under the Foreign Account Tax Compliance Act (FATCA) and CRS.
Foreign Account Tax Compliance Act (FATCA)
FATCA is part of the US Hiring Incentives to Restore Employment Act (2010) and aims to combat tax evasion by US tax residents using foreign accounts.
Model 1 intergovernmental agreements (IGAs) have been adopted widely. Around 70 jurisdictions have formally signed Model 1 IGAs with the US.
It is important to recognise that FATCA potentially puts obligations on all trusts, whether or not they have any US connections, US assets or US income. In signing the Model 1 IGA, jurisdictions are agreeing to incorporate FATCA reporting requirements into their own tax code and take responsibility for enforcement.
The same basic framework to categorise trusts will be used in all Model 1A-type IGA FATCA agreements including UK agreements with the Crown Dependencies and the Overseas Territories (CDOT), and the OECD Common Reporting Standard (CRS).
OECD Common Reporting Standard (CRS)
On 15 July 2014, the Organisation for Economic Co-operation and Development (OECD) published the full version of the Standard for Automatic Exchange of Financial Account Information in Tax Matters. The document includes: Model Competent Authority Agreement; Common Reporting Standard; Commentaries.
The Common Reporting Standard (CRS) 'calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis'.
At present, 90 jurisdictions have publicly committed to implementation. The UK is one of over 50 jurisdictions having committed to being 'early adopters' to implement the first automatic information exchanges in 2017.
STEP sits on both the HMRC consultative group and the Business and Industry Advisory Committee to the OECD (BIAC) on CRS.
Last updated 3 March 2016.