The OECD have published a new consultation “Mandatory Disclosure Rules for Addressing CRS Avoidance Arrangements and Offshore Structures”, it considers whether additional reporting requirements will reduce cross border tax evasion.

The measures are targeted at arrangements designed to bypass the Common Reporting Standard (CRS) rules, which facilitate the gathering and sharing of information between different tax authorities.

The model rules target promoters and advisers who have a significant involvement in the design or implementation of “CRS Avoidance Arrangements” or offshore structures; it is not suggested that simply implementing a small part of the arrangements with no knowledge or understanding of the greater planning should create a reporting obligation. For example:

  • Implementing a transfer of $249,999 from one bank account to another:
    • no obligation to report
  • Recommending funds are scattered so that the amount in each bank is under the $250,000 threshold for CRS reporting:
    • adviser is obliged to report

“CRS avoidance arrangements” are any arrangements (it is reasonable to conclude were) designed to, marketed as or has the effect of bypassing the CRS Legislation or exploiting the absence thereof.

The consultation document preserves the protections granted by legal professional privilege, but notes that the information to be reported would usually not be covered. In addition, it is suggested that where arrangements would be covered by privilege, the reporting obligation would move to the taxpayer.

Under the proposed rules, an adviser will not be obliged to report any arrangements where it holds a certified copy of the taxpayer’s most recent tax filing showing that they are compliant with their tax obligations in respect of the arrangements.

No specific questions have been raised, instead the document takes the form of draft regulations as a starting point for discussions.

The consultation will run until 15 January 2018, and replies should be sent, in Word format, to This email address is being protected from spambots. You need JavaScript enabled to view it. and addressed to the International Co-operation and Tax Administration Division, OECD/CTPA.

Links:

OECD: Mandatory Disclosure Rules for Addressing CRS Avoidance Arrangements and Offshore Structures

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