From the paper commitment in 2014 to the promulgation of the “Measures for the Management of Non-resident Financial Account Tax-related Information Due Diligence (Draft for Comment)” in October last year, CRS has entered the “practical period” since January 1 this year. In fact, for the vast majority of Chinese residents, this new policy is "indifferent", but for the rich who have financial assets allocation overseas and invest in the shell companies overseas, the impact can not be underestimated.

CRS has entered the “practical period” since January 1 this year. This means that starting this year, in addition to changing foreign exchange at the bank, people have to fill out an application form to self-declare, and when they open a new account, they have another formality, that is, fill out a document stating their tax resident status. Although for most people, this document is only a tick after the “Chinese tax residents” column in the table, there is a lot of articles behind this statement. This is the prelude to the exchange of resident account information with the tax authorities of hundreds of countries (regions) in the world. This means that in the future, the account information of Chinese tax residents abroad will be clearly understood by the Chinese tax authorities; accordingly, the account information of foreign tax residents in China will also be controlled by their own tax authorities.

attention

What is the mysterious CRS?

In fact, although it is not very concerned about this detail for ordinary people, since the State Administration of Taxation announced the "Measures for the Management of Due Diligence of Tax Information on Non-Resident Financial Accounts (Draft for Comment)" in mid-October last year, it clearly stated It is necessary to combat cross-border evasion of taxes and fulfill the international obligation of automatic exchange of tax information on financial accounts. In this regard, many specific groups in China are still quite sensitive, including Chinese who transfer assets to overseas more or less through various channels. These people have long heard about CRS, the standard for automatic exchange of tax information on financial accounts.

The so-called CRS is a common reporting standard based on the same standard between countries and regions. It is understood that the Organization for Economic Co-operation and Development (OECD) issued the AEOI (Automatic Exchange of Tax Information on Financial Accounts) standards, including the Common Declaration Guidelines (CRS), which generally means that the signatory countries or regions disclose each other’s countries or The economic assets of local citizens in the country to enhance tax transparency and combat cross-border tax evasion.

Follow up

101 countries and regions have participated in information exchange

According to relevant persons from the State Administration of Taxation, as the process of economic globalization continues to accelerate, taxpayers hold and manage assets through overseas financial institutions, and conceal their profits in overseas financial accounts to avoid taxation obligations of resident countries. The willingness to further strengthen the exchange of international tax information and safeguard the tax interests of the country is becoming more and more urgent. The G20 commissioned the Organization for Economic Co-operation and Development (OECD) to develop a “standard for the automatic exchange of tax-related information on financial accounts”, which was released in July 2014.

This "standard" was approved by the G20 Brisbane Summit in the same year, providing a powerful tool for countries to strengthen international tax cooperation and combat cross-border tax evasion. With the strong promotion of the G20, 101 countries (regions) have committed to implement “standards” as of the end of last year.

China promised to implement this “standard” at the meeting of the G20 finance ministers and central bank governors in September 2014, which determined that the first exchange of information was in September 2018.

dynamic

This year, we will complete an account survey of more than 6 million yuan.

According to the stipulated procedure of the “Automatic Exchange of Tax Information on Financial Accounts” issued by the G20 Commission for Economic Cooperation and Development, the investigation first identifies the tax resident individual and enterprise of another country (region) through a due diligence process by a financial institution of a country (region). In the account opened by the institution, the name of the account, the taxpayer identification number, the address, the account number, the balance, the interest, the dividend, and the income from the sale of the financial assets are reported to the competent authority of the country (region) where the financial institution is located. The tax authorities of the country (region) exchange information with the tax authorities of the account holders, and finally realize the effective supervision of cross-border tax sources by countries (regions).

According to the schedule, starting from January 1 this year, China will conduct due diligence on newly opened personal and institutional accounts; before December 31 this year, complete due diligence on the inventory of high-net-worth individuals. The so-called high net worth account refers to the total balance of financial accounts as of December 31, 2016 exceeding 6 million yuan. Prior to December 31, 2018, China will complete due diligence on the inventory of personal low-net accounts and all stock agency accounts.

influences

Overseas deposits of huge population account information will be mastered

A financial analyst at a foreign bank said in an interview with Beijing Youth Daily that in fact, for the vast majority of Chinese residents, this new policy is "indifferent", but there are several types of special people who should be affected. For example, he said that people with financial assets overseas must bear the brunt. For example, a Chinese citizen has a huge sum of money in a bank in the UK. Once China and the United Kingdom have reached an agreement, which Chinese citizen has a bank in the UK? The amount of information will be sent by the Bank of England to the UK Banking Authority, the UK Financial Services Authority, which will then report to the UK Revenue Agency for information exchange between the UK Revenue Agency and the State Administration of Taxation. The Chinese citizen is in the UK. All information about the bank will be clear to the SAT.

In addition, Chinese citizens who hold shell companies overseas for investment and wealth management and have established family trusts overseas will be affected, especially in the early Chinese richest favorite in Singapore, Hong Kong, New Zealand, Cayman Islands, Virgin Islands, Cook. Family trusts have been established in the archipelago and Guernsey. These countries and regions have now become CRS contractors. Of course, these affected people belong to the rich class and have nothing to do with ordinary people.

up to date

Purchase of Hong Kong insurance will also be reported

Like mainland China, Hong Kong is a “second batch” of countries and regions that have promised to implement CRS, which means that Hong Kong financial institutions are also implementing CRS from this year.

Chinese citizens who purchase high-value life insurance over a certain amount overseas will also be exchanging information. For example, many mainland residents who were keen on buying life insurance in Hong Kong in the previous paragraph are obviously affected. It is reported that since this year, when mainland residents purchase Hong Kong insurance policies above HK$7,800, their policy information will be automatically reported to the Chinese tax authorities as personal tax assets. This information will serve as the basis for multiple investigations, including the legality of the source of the asset, the legality of the asset's exit, and the legality of the tax payment. In fact, not only the mainland residents who bought Hong Kong insurance this year are affected, because Hong Kong is a CRS contracted area, Hong Kong insurance companies are obliged to report the policy assets of high-net-worth clients who have historically purchased large amounts of insurance policies to national taxation. General Administration.

Dispel doubt

Why is the United States not in the CRS?

Although more than 100 countries and regions have joined the CRS, the United States, which is the world's number one economic power, is not listed. This means that the Chinese tax authorities' information on the financial assets of Chinese citizens in the United States is currently not available through CRS.

However, this does not mean that the United States rejects the exchange of such account information, but that the United States actually has its own "Overseas Account Tax Compliance Act" (FATCA), and the CRS is largely upgraded according to this US bill. Into.

According to the FATCA issued by the United States in 2010, foreign financial institutions are required to report information on American accounts to the US tax authorities. Otherwise, foreign financial institutions will be subject to a 30% withholding tax withholding tax when receiving payments from the United States. FATCA mainly adopts the bilateral information exchange mechanism, and the United States and other countries (regions) exchange information according to bilateral intergovernmental agreements. In fact, this means that although the United States is not included in the CRS collective exchange of information, it can sign agreements with other countries "one-on-one", and can also exchange tax information of financial accounts.

Emphasize

"Chinese tax residents" is not based on identity documents

In particular, it is important to emphasize that although most people choose to be “Chinese tax residents” in the declaration form when they open a new bank account this year, the concept of “Chinese tax residents” and “residents on our identity documents” "The concepts are not exactly the same.

So how do you determine your identity? According to China's tax law, an individual in a “Chinese tax resident” refers to an individual who has a domicile in China or who has lived in the territory for one year without a domicile. (There is a domicile in China that refers to the household registration, family, and economic interests in China. Domestic customary residences; Chinese tax resident enterprises refer to enterprises established in China according to law or established in accordance with foreign (regional) laws but with actual management institutions in China. Individuals and businesses that do not meet the above conditions are not Chinese tax residents. It is worth emphasizing that foreign Chinese, those who have obtained permanent residency in foreign countries, or overseas Chinese who have stayed abroad for more than a certain period of time, if they have constituted local tax residents according to the laws of the country (region), are not Chinese tax residents. (Reporter Zhang Qin)

Enter [Sina Finance and Economics Unit] Discussion