Taiwan Adopts Common Reporting Standard to Combat Tax Evasion and Increase Transparency
The Taiwanese government has announced its adoption of the Common Reporting Standard (CRS) to combat tax evasion and increase transparency in international financial transactions. As part of this effort, the Financial Supervisory Commission has introduced new regulations for financial institutions, which took effect on January 1, 2019.
What is the CRS?
The CRS requires financial institutions to report information about their clients’ financial accounts to the Taiwanese authorities. This includes:
- Name
- Address
- Tax identification number of each account holder
- Details about the account itself
New Regulations for Financial Institutions
Financial institutions are required to conduct a reasonableness test on self-certification forms completed by account holders and identify indicia for every tax jurisdiction. In contrast, the Foreign Account Tax Compliance Act (FATCA) only requires reporting of US indicia.
Additionally, financial institutions must:
- Develop additional policies and procedures
- Upgrade their IT systems
- Train staff to ensure CRS compliance
The deadline for implementing these changes is January 1, 2019.
Guidance and Support
The Taiwanese government has announced that it will release self-certification form templates in the coming weeks. Experts recommend that financial institutions plan their resources accordingly, as the implementation of the CRS requires significant changes to operating procedures.
“Reporting FIs should revise all their operating procedures for onboarding new accounts and reviewing pre-existing accounts,” said Jessie Chen, Common Reporting Standard Leader at PricewaterhouseCoopers Taiwan.
The government has also announced that it will provide guidance on how financial institutions should respond to situations where self-certification forms or documentary evidence cannot be obtained. However, the exact details of this guidance are still unclear.
Implementation Guide
The Financial Supervisory Commission is expected to release a guide on the implementation of the CRS in Taiwan in the coming weeks. The guide will provide further clarification on the regulations and requirements for financial institutions.
Impact and Expectations
The adoption of the CRS is seen as a major step forward in the fight against tax evasion and money laundering, and is expected to increase transparency and cooperation between countries in the global financial system.