Taiwan’s Financial Institutions Required to Identify Tax Residence of Non-Resident Account Holders

New Regulations Aim to Enhance Transparency and Combat Tax Evasion

The Ministry of Finance (MOF) in Taiwan has announced new regulations requiring financial institutions in the country to establish the tax residence of all non-resident account holders. This move is part of Taiwan’s efforts to implement the Common Reporting Standard (CRS), an international standard for automatic exchange of information on financial accounts.

What Are the Regulations?

The regulations require financial institutions to perform due diligence procedures on their account holders, including:

Obtaining self-certifications
Conducting reasonableness tests

The reported information will include:

Name and address
Jurisdiction of residence
Tax identification number
Date and place of birth
Other details

Timeline for Implementation

The MOF is expected to finalize the regulations by the end of 2017, with financial institutions having approximately one year to prepare for implementation. The first stage of due diligence procedures is expected to be completed by December 31, 2019, while the second stage will be completed by December 31, 2020.

Why Is This Move Important?

The move is part of Taiwan’s efforts to combat tax evasion and promote transparency in the global financial system. The CRS aims to standardize the automatic exchange of information on financial accounts, making it easier for countries to detect and prevent tax evasion.

What Does This Mean for Financial Institutions?

According to PwC Taiwan, the regulations are highly aligned with the OECD’s CRS guidelines and will require financial institutions to review their existing due diligence procedures. Jessie Chen, Common Reporting Standard Leader at PwC Taiwan, advises financial institutions to:

Closely monitor the development of these new anti-tax avoidance measures
Re-examine the adequacy of their group investment structures and transaction models

What’s Next?

For more information on how the regulations may affect your business, please contact a member of PwC Taiwan’s Financial Services practice team.