Common Reporting Standard (CRS)
Governments around the world are adopting a new Automatic Exchange of Information (AEoI) standard between tax authorities in certain countries. This legislation is known as the Common Reporting Standard (CRS) and is seen as a critical tool in the worldwide fight against tax evasion. To date, more than 100 countries, including the UK, Islands (Jersey, Guernsey, Isle of Man) and Gibraltar, have committed to adopting the CRS.
To comply with the CRS, participating jurisdictions must obtain certain customer information from their Financial Institutions and exchange that information on an annual basis with other participating jurisdictions.
In the UK, our first CRS report to HM Revenue & Customs (HMRC) in respect of customers we have identified as ‘Reportable Persons’ is required to be submitted by 31 May, 2017.
How does the Common Reporting Standard impact me?
Under the CRS, ICICI Bank UK plc is required to identify customers who are tax resident in one country but with financial accounts held in another for inter-jurisdiction reporting purposes. To do this we need to collect and report certain information on the ‘reportable person’ and their financial account(s) to the local tax authorities.
Most customers will not need to do anything. The majority of our customers will be identified as UK resident for tax purposes in the UK and therefore not ‘reportable’. However, there will be some customers who based on the information we hold, we believe to be ‘reportable persons’ or ‘reportable entities’.
As a customer of the Bank if we consider that you are a reportable person or reportable entity we will write to you prior to sharing the required information with HMRC.
Do I need to do anything?
No, as a customer of the Bank if we consider that you are a reportable person or reportable entity we will write to you prior to sharing the required information with HMRC.
You do not need to take any further action until otherwise you feel that the information we hold is incorrect
What does the Common Reporting Standard mean for customers?
ICICI Bank UK plc is obliged to report to the local tax authority, the customers with a financial account who are tax resident in another participating jurisdiction. The local tax authority will then pass this information onto the participating jurisdiction where it has been established that the customers are resident for tax purposes.
Where can I find out more about the CRS?
There has been significant press coverage on CRS and there are many resources available, including information on HMRC’s website. You may also like to look at the Organisation for Economic Cooperation and Development (OECD) website where more in-depth technical information on the rules governing tax residency have been published by each national tax authority.
List of Participating Jurisdictions
Below are some quick definitions of some common tax compliance jargon.
Reportable person or Reportable entity
A CRS Reportable Person is any individual who holds a financial account with ICICI Bank UK Plc and who has a tax residency in a participating jurisdiction, other than the UK. As well as personal account holders, certain entities resident in a participating country or those which have individual controlling persons who are resident for tax purposes in participating countries may be reportable.
Jurisdiction
For tax purposes a ‘jurisdiction’ is defined as an area subject to its own distinct tax regulations such as a US state, city, county or country.
Participating jurisdiction
This is a jurisdiction which has an agreement in place to exchange information in accordance with the OECD CRS.
Reportable for CRS purposes
Each jurisdiction has its own rules for defining tax residence and jurisdictions have provided information on how to determine whether a person or an entity is tax resident in the jurisdiction. Generally, an individual or an entity is resident for tax purposes in a jurisdiction, if, under the laws of the jurisdiction, it should be paying taxes there. When we determine a customer who is holding a financial account, is resident for tax purposes in a participating jurisdiction and may be reportable for CRS, we will pass the relevant information to the local tax authority. This reporting of the customer and their information means they are ‘reportable for tax purposes’ to the local authority.
Self-certification
If a customer opens a new account, invests in a new product, or has a change in circumstances which may make them tax resident in a participating jurisdiction, we may write to them asking them to complete a self- certification form confirm their place of residence for tax purposes. We may also write to some pre-existing customers who have financial accounts with us where this information has not previously been captured. This is called ‘self-certification’.
Controlling person
Controlling persons are the Natural Persons who have ultimate control over an entity. In the case of a trust, the Controlling Person(s) are the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(ies) or class(es) of beneficiaries, or any other natural person(s) exercising ultimate effective control over the trust (including through a chain of control or ownership).
Entity
For the CRS this is defined as a legal person or a legal arrangement such as a corporation, organisation, partnership, trust or foundation. An entity will therefore be any customer that holds a business account, product or service.
Under CRS, sole traders are not treated as entities but as individuals.
Financial account
The term “financial account” means an account maintained by a financial institution, and includes a Depository Account, a Custodial Account, certain equity or debt interest in investment entities and certain Cash Value Insurance Contract and Annuity Contract issued or maintained by a financial institution. A financial account is not an excluded account as per the CRS.