OECD Consults On Tackling Common Reporting Standard Circumvention

by Ulrika Lomas, Tax-News.com, Brussels

28 February 2018

The OECD has recently launched a consultation on tackling the circumvention of its latest international tax transparency standard, the Common Reporting Standard, through the use by individuals of residency by investment (RBI), or citizenship by investment (CBI) schemes.

These schemes typically entitle individuals to reside or gain citizenship through making an investment in a territory. They are particularly prevalent in Caribbean territories but similar schemes are offered in the EU, such as in Malta.

Launching its consultation, the OECD said: "Individuals may be interested in these schemes for a number of legitimate reasons, including greater mobility thanks to visa-free travel, better education and job opportunities for children, or the right to live in a country with political stability. At the same time, information released in the market place and obtained through the OECD's CRS public disclosure facility, highlights the misuse of RBI and CBI schemes to circumvent reporting under the Common Reporting Standard (CRS)."

The Common Reporting Standard is the new standard that replaced exchange of information between countries on request, with an automatic obligation to share information on foreign taxpayers to the state that they are tax resident in, to tackle aggressive tax avoidance, evasion, and fraud.

The OECD's new consultation looks at how these schemes are being used to circumvent the CRS, identifies the types of schemes that are most likely to be abused, reminds stakeholders of the importance of correctly applying relevant CRS due diligence procedures, and explains the next steps the OECD intends to take.

It seeks public input on how these schemes are being abused and on potential policy responses.

TAGS: individuals | Foreign Account Tax Compliance Act (FATCA) | tax | investment | Malta | tax avoidance | interest | FATCA | education | Compliance | Tax