Tax Technology - Common Reporting Standard: China

; posted on
September 13th, 2018

On July 15, 2014, the Organization for Economic Co-operation and Development (“OECD”) approved the Standard for Automatic Exchange of Financial Account Information (“AEOI”), also known as the Common Report Standard (“CRS”). The due diligence procedures of the CRS are designed to identify accounts which are held by residents of jurisdictions with which the implementing jurisdiction exchanges information under the Standard. This resulted in a wider approach in order to record jurisdictions in which a person is a tax resident.

China has constantly expressed its support for the Organization for Economic Co-operation and Development’s OECD initiatives in the area of automatic exchange of information to promote tax transparency and to combat cross-border tax evasion.

As a step towards global tax cooperation, the China State Administration of Taxation (SAT) has conducted several rounds of consultation on the Chinese version of the AEOI standard since the beginning of 2016.

On September 1, 2018, the Chinese regime shared tax-related information with authorities in 83 countries that operate under the CRS as set forth by the OECD.

The table below sets out due diligence procedures and timelines for different categories of financial accounts:

Individuals

Type of Account

Description

Due diligence procedure

TimeLine

New

Opened on or after 1 July 2017

Self-certification by account holder
and review by the financial institution

1 July 2017 and thereafter

Existing but low value account

Aggregate account balance on 30 June 2017 not exceeding US$1 million

Perform electronic search of information maintained by financial institution

By 31 December 2018

Existing and high value account

Aggregate account balance on 30 June 2017 exceeding US$1 million

Perform electronic and paper
record search of information maintained
by financialinstitution and customer managers to identify tax resident status

By 31 December 2017

 

Entities

Type of Account

Description

Due diligence procedure

Timeline

New

Opened on or after 1 July 2017

Self-certification from account holder and review by the financial institution

1 July 2017 and thereafter

Existing/de minimis

Aggregate account balance
on 30 June 2017not
exceeding US$250,000

No action required (subject to change in circumstances and on-going monitoring)

None

Existing/Non-de minimis

Aggregate account balance on
30 June 2017 exceeding
US$250,000

Perform search ofinformation maintained by financial
institution and obtain self-certification from account holder in certain cases

By 31 December 2018

 

The new sources of taxpayer data from domestic and cross-border sources are gathered by SAT through the integrated portal developed within the SAT website. A separate login instruction for Financial Institutions (FIs) which have a nil report and FIs, which have reportable accounts, are provided.

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