What is Common Reporting Standard?


The Common Reporting Standard (“CRS”) is a standard for the Automatic Exchange of Financial Account Information (“AEOI”) promulgated by the Organisation for Economic Co-operation and Development.

To provide a legal framework for the implementation of AEOI, the Government of the Hong Kong Special Administrative Region has enacted the Inland Revenue (Amendment) (No. 3) Ordinance 2016, which came into effect on 30 June 2016. Effective from 1 January 2017, all reporting financial institutions in Hong Kong are required to identify the tax residency of their account holders, and to furnish a return periodically reporting the required information in relation to the reportable accounts to the Inland Revenue Department (“IRD”) for its transfer to the tax authority of the relevant jurisdiction.

For more details, you are advised to visit the IRD website or the OECD website or contact your tax advisor.

FAQ


What is Common Reporting Standard?

The Common Reporting Standard (“CRS”) is a standard for the Automatic Exchange of Financial Account Information (“AEOI”) between participating jurisdictions to enhance tax transparency and fight against cross-border tax evasion. 

What is the Automatic Exchange of Financial Account Information?

The Automatic Exchange of Financial Account Information (“AEOI”) is a new system that involves the transmission of financial account information from Hong Kong to an overseas tax jurisdiction with which Hong Kong has entered into an AEOI agreement.

How does CRS affect new and pre-existing customers?

To identify reportable persons, if you purchase insurance policy from FWD Life Insurance Company (Bermuda) Limited (“FWD”) on or after 1 January 2017, FWD will require you to provide a self-certification form to confirm your tax residency. If your insurance policy was purchased before 1 January 2017, FWD will identify your tax residency based on your existing account information. If necessary, FWD will ask you to provide a self-certification to confirm your tax residency.

Who will be the reportable persons under AEOI? 

Individuals or entities who hold financial accounts with FWD and are liable to tax by reason of residence in the AEOI participating jurisdictions are reportable persons. Financial account information of reportable persons will be furnished to the Inland Revenue Department (“IRD”) and IRD will then transmit the information to the tax administration of the relevant jurisdiction of which the account holder is tax resident.

What is a self-certification? 

A self-certification is a formal declaration that the account holder makes in connection with his/her tax residence. An account holder is required to make a formal declaration when he/she is applying for an insurance policy and/or the account holder has subsequent changes in circumstances and/or when FWD has doubt about your tax residence. A beneficiary is also required to make a formal declaration when he/she is submitting a death claims.

What information does reporting financial institution collect and report?

In general, information including your name, address, tax identification number, date of birth, place of birth, jurisdiction to which the information is reportable, policy number and the account balance or value as of the end of the calendar year of financial accounts held by reportable persons will be collected by reportable financial institution and reported to IRD.

Why am I asked to provide my tax residency in the self-certification?

Under the Inland Revenue (Amendment) (No. 3) Ordinance 2016, reporting financial institutions are required to apply the due diligence procedures to identify the tax residency of the account holders and controlling persons for the purpose of AEOI. Therefore an account holder is required to provide his/her tax residency to a reporting financial institution.

What should I do if there are changes in circumstances affecting my tax residency?

You are required to advise the reporting financial institution of any change in circumstances which affects your tax residency and provide the reporting financial institution with a suitably updated self-certification form within 30 days of such change in circumstances.

Which countries are AEOI participating jurisdictions? 

There are more than 100 countries or jurisdictions committed to the AEOI including China, Macau, United Kingdom, Japan, Korea, Australia, New Zealand, etc. You may refer to the OECD CRS portal for the complete list of participating jurisdictions.

How do I get more information and advice? 

For more details, you are advised to visit the IRD website or the OECD website or contact your tax advisor.

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