Elimination of tax evasion and increasing tax revenue are widely stated objectives of the common reporting standard (CRS) and the Foreign Account Tax Compliance Act (FATCA). However, the modest increase intax revenue in the United States following the introduction of FATCA may confirm an alternative view that the real purpose of FATCA is to allow the U.S. government access to private financial information so it can control the global financial industry. FATCA and the CRS are each designed to, at a minimum, require reporting financial institutions (RFIs) to report information on the interests that reportable persons have inreportable ‘‘financial accounts.’’ The CRS and FATCA have many similarities in their approach to due diligence and reporting requirements. The OECD, the architect of the CRS, intended this so that RFIs could substanitially use the procedures and systems they had begun developing in connection with FATCA.
The CRS has a significantly wider scope than FATCA. FATCA requires reporting with respect to U.S. tax payers who beneficially own financial accounts. The CRS requires reporting for tax residents in CRS ‘‘participating jurisdictions,’’ of which there are now more than 100. Further, the CRS requires reporting on tax residents that control or beneficially own financial accounts. This article explores key differences between FATCA and the CRS from an international privateclient practitioner’s perspective.
