On December 19, 2017, the Chinese version of the CRS Multilateral Tax Data Service Platform was officially announced on the State Taxation Administration's portal website, marking another step forward for China in the automatic exchange of tax-related information under the CRS.
According to the "User Manual for the Multilateral Tax Data Service Platform," financial institutions (excluding banks) that meet the definitions set forth in the "Administrative Measures for Due Diligence on Tax Information of Non-Resident Financial Accounts" must register in the system, regardless of whether they have reportable accounts (financial institutions with no reportable accounts for the year must complete a zero-declaration in the system). If a financial institution entrusts an agency to report data, the agency shall register the account and register the financial institution's information on its behalf.
From the announcement of the CRS in China to the official launch of the tax service platform, the State Taxation Administration has issued more than a dozen relevant policies over a 14-month period.
On October 14, 2016, the State Taxation Administration, in conjunction with the Ministry of Finance, the People's Bank of China, the China Banking Regulatory Commission, and other six ministries and commissions, jointly released the announcement of the "Administrative Measures for Due Diligence on Tax Information of Non-Resident Financial Accounts."
According to the announcement, the timeline for the Chinese version of the CRS is as follows:
The "Administrative Measures for Due Diligence on Tax Information of Non-Resident Financial Accounts" targets non-residents (individuals and enterprises other than Chinese tax residents) who open accounts within China, or passive non-financial entities with non-resident controlling persons, for the purpose of due diligence.
However, if a Chinese tax resident holds financial accounts overseas, it is necessary to analyze and judge based on the due diligence policies of the country where the account is located. Once the relevant information is exchanged to China, the confirmation of tax obligations must be carried out in accordance with China's relevant tax policies.
Therefore, under the CRS implementation system, financial planning and personal tax residency planning for affected high-net-worth individuals are particularly crucial. Measures such as investing in overseas real estate, jewelry, artwork, and other types of non-financial assets, or immigrating to a suitable tax jurisdiction, are all excellent choices for reasonably avoiding tax risks.
A gentle reminder: as the time for the implementation of the Standard for Automatic Exchange of Financial Account Information in Tax Matters approaches in September 2018, high-net-worth clients should seek professional advice based on their own circumstances to reasonably avoid corporate and personal tax risks, which is the wise choice.
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