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Add subtitle here. Add presentation title. Salah Gueydi Director of Tax QFC Authority Doha, 12 April 2018. Common reporting standard. introduction. Changes in legal and regulatory frameworks. (GFC). (EoI). Crs: overview.

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  1. Add subtitle here Add presentation title

  2. Salah Gueydi Director of Tax QFC Authority Doha, 12 April 2018 Common reporting standard

  3. introduction Changes in legal and regulatory frameworks (GFC) (EoI)

  4. Crs: overview Subject matter: Automatic exchange of financial account information Developed by the OECD and endorsed by the G20 member states Has two main components: • Competent Authority Agreement (MCAA) • CRS (Due Diligence and Reporting Rules (DDRR) Covers a broad scope through three dimensions: • Financial institutions concerned • Financial accounts covered • Financial information to be reported

  5. Legal basis International agreements • Double Taxation Agreements (Article 26) • TIEAs (allowing for AEOI) • MAAC • MCAA Domestic law • CRS needs to be translated into domestic law to create the obligation on FIs to report the required information Deviates from FATCA IGA

  6. mcaa Purpose: operationalise the obligation in the international agreement (MAAC) Obligations: • Annually (and automatically) exchange reportable info as per the agreement • Time of reporting: within 9 months • Use CRS Schema Possibility of non-reciprocal exchange of info

  7. mcaa Notifications under MCAA – by jurisdictions • Domestic law to apply MCAA is in place • Dates to determine Preexisting and New Accounts • Date of completion of DDP • Reciprocal/Non-reciprocal exchange • Data transmission and encryption methods • Requested safeguards to protect personal data • Availability of confidentiality and data safeguard standards (+filled questionnaire) • List of jurisdictions with which it intends to have an agreement in effect

  8. mcaa Notifications under MCAA – by Coordinating body secretariat CAs will be notified of the following: • Notifications under the agreement • When a CA signs the agreement Cost of administration of the agreement by CBS: to be shared (equally) by signatories. It is possible to obtain an exemption therefrom

  9. Crs - process

  10. Crs: key obligation Reporting Financial Institutions (RFIs)are required to review their Financial Accounts to identify Reportable Accounts by applying Due Diligence Rules and, then, Report the Reportable Information.

  11. Reporting Financial Institutions (RFIs) Financial institutions Custodial Institution • Holding Financial Assets for the account of others • Depository Institution • Accepting deposits in the ordinary course of banking or similar business • Investment Entity • Carrying out certain listed activities for or on behalf customers or gross income is attributable to dealing in FA • Specified Insurance Company • Insurance Co (or Holding Co thereof) that issues, or makes payments with respect to, a Cash Value Insurance Contract or an Annuity Contract.

  12. Reporting Financial Institutions (RFIs) Jurisdiction FIs Resident FIs including branches of non-resident FIs situated in that jurisdiction BUT excluding its branches situated outside that jurisdiction In Qatar: • FIs resident in Qatar (excluding branches situated outside Qatar) • Branches of non-resident FIs situated in Qatar

  13. Financial institutions (fis)

  14. Reporting Financial Institutions (RFIs) Jurisdiction FIs Case of Dual Residence: • FI is resident of two (or more jurisdictions) • There is no duplication in reporting obligation • Will have to fulfill reporting obligations under CRS in each jurisdiction it is a resident thereof for the accounts that are maintained therein

  15. Reporting Financial Institutions (RFIs)

  16. Reporting Financial Institutions (RFIs) Non reporting financial institutions (NRFIs) Any FI that is not a Non-Reporting FI (NRFI) NRFI: • Entities treated as EBOs under the IGA • Certain pension funds • Exempt Collective Investment Vehicles • A trust the trustee of which is a RFI that fulfilled its reporting obligations • Any other Entity that presents a low risk of being used to evade tax (subject to conditions)

  17. Financial Accounts Definition in the standard: • General rule: “Accounts maintained by a FI” • Specific examples: • Depository Accounts • Custodial Accounts • Equity and debt interests • Cash value insurance and annuity contracts • Excluded accounts because of low risk of being used to evade tax (extendable – subject to conditions)

  18. Financial Accounts Reportable Accounts Financial Accounts held by a Reportable Person or by a Passive Non-Financial Entity with one or more Controlling Persons that is a Reportable Person Reportable Person: Reportable Jurisdiction Person, unless specifically excluded Reportable Jurisdiction Person: an individual or entity that is residentin Reportable Jurisdiction for tax purposes Exclusions: listed companies and related entities, government entities, FIs, etc.

  19. Financial Accounts Reportable Accounts NFE: entities other than FIs Passive NFEs: • NFEs other than Active NFEs or • An Investment Entity that is not a Participating Jurisdiction Financial Institution Participating Jurisdiction: a jurisdiction with which an agreement to exchange financial info is in place (i.e. at least one jurisdiction is required to provide the info) Reportable Jurisdiction: a jurisdiction with which an agreement to exchange financial info is in place and there is an obligation to provide the info to that jurisdiction Active NFE:

  20. Financial Accounts Reportable Accounts Controlling Person: for a legal entity, it is the natural person who exercises control over the entity (Beneficial owner in FATF) Reportable Account?

  21. Financial Accounts Reportable Accounts By virtue of the Account Holder

  22. Financial Accounts Reportable Accounts By virtue of the Controlling person

  23. CRS: DueDiligenceProcedures - DDP Why standardisedDDP? • Ensure consistent quality of the information reported and exchanged • Leverage on existing processes Types of DDP under CRS: • Split between Preexisting and new Accounts • Need of a date from which new account procedures will apply • Split between Individual and Entity Accounts

  24. CRS: DueDiligenceProcedures - DDP DDP for Preexisting Individual Accounts All accounts are reviewed Split between Lower Value Account and Higher Value Account: • Threshold: USD 1 m at the point of review • Reason: apply a less stringent and more flexible DDP to lower value accounts

  25. DDP for Lower Value Preexisting Individual Accounts To determine the residence of the Account Holder, FIs have two options: • Rely on electronic record search of indicia or • Use the residence address test Residence address test: use a current residence address, when available in the records, provided it is based on documentary evidence Documentary evidence: government issued document even if it does not contain the exact address provided the FI is able to establish that it is in the jurisdiction that issued the document If documentary evidence is unreliable: • Either the residence address test cannot be used in the first place or • If change in circumstances, FI must obtain self certification and new documentary evidence within the prescribed time

  26. DDP for Lower Value Preexisting Individual Accounts Indicia • AH as a resident of Reporting Jurisdiction (RJ) • Current mailing or residence address in a RJ • Current or most recent phone numbers in a RJ + no phone number in the Jurisdiction of FI • Current standing instruction to transfer money to an account maintained in a RJ • Power of attorney or signatory authority to a person with an address in a RJ • “Hold mail” instruction or “in care of” address in a RJ + RFI has no other address on file • Reportable Jurisdiction indicia discovered: • Account to be treated as Reportable to each of the jurisdictions for which an indicium is identified unless • FI elects to apply the curing procedure

  27. DDP for Lower Value Preexisting Individual Accounts Curing Procedure: • If indicia 2 to 5 are discovered and • FI obtains (or has previously reviewed and maintains a record of) a self certification supported by documentary evidence establishing the AH non reportable status • THEN the FI may treat the account as non reportable • Only indicia: “hold mail” instruction or “in care of” address: FI must: • Complete paper search or • Obtain documentary evidence or self certification If residence status not still established: undocumented account No indicia: No further action required until change in circumstances

  28. DDP for High Value Preexisting Individual Accounts High Value Accounts: Balance or Value (after aggregation when allowed by FI systems) over USD 1 m OR known about as such by Relationship Manager (RM) Electronic search to be made for all accounts (no residence test option) If FI systems capture all necessary information to complete the indicia search, then a paper record search is not required If not, paper record search must be made for the missing indicia Option to apply new accounts DDP to HVPIA Only “hold mail” instruction or “in care of address” are discovered and no actual knowledge of relationship manager of AH reportable status: • RFI must obtain Self certification/Documentary evidence of residence status of AH or • The account is reported as undocumented

  29. DDP for High Value Preexisting Individual Accounts RJ indicia discovered or actual knowledge of Relationship Manager (RM) of AH reportable status: • The account is treated as reportable, unless • FI elects to apply curing procedure RM inquiry is required (in addition to electronic/paper indicia search) If an account becomes high value in a calendar year, RFI must complete the enhanced review within the subsequent year

  30. DDP for Preexisting Individual Accounts

  31. DDP for New Individual Accounts Individuals must provide a self certification establishing the jurisdiction of tax residence To be valid, the certificate must be signed by the AH, be dated and include: name, residence address, jurisdiction of residence, TIN and date of birth of AH RFI must confirm the reasonableness of the self certification (AML/KYC info, etc.)

  32. DDP for Preexisting Entity Accounts DDP for Preexisting Entity Accounts – In relation to AH Two steps: • Is the Entity a Reportable Person? • For Passive NFEs, is any of the Controlling Persons a Reportable Person? If so, then the account is reportable. CRS provides for an option to exempt preexisting entity accounts with a value or balance of USD 250K or less from review Need to review the balance every year If the info maintained indicates that the AH entity is a resident of a RJ, then RFI must treat the account as Reportable Account; unless • It obtains a self certification or reasonably determines on the basis of info it has or publicly available that the entity is not a Reportable person. In this case, the account will be treated as non reportable

  33. DDP for Preexisting Entity Accounts DDP for Preexisting Entity Accounts – In relation to Controlling Persons Two steps: • Identify whether or not the entity is a PNFE and • If so, determine its Controlling Persons Test applicable regardless of whether or not the entity was determined as a Reportable Person Implications: Accounts becoming Reportable, more RJ identified, more details needed to be reported Status of the entity: is it a PNFE? • Info in possession of RFI • Publicly available info • Self certification

  34. DDP for Preexisting Entity Accounts DDP for Preexisting Entity Accounts – In relation to Controlling Persons Determination and status of CP: • Balance or value of the Account: <= USD1 m? • If yes, less stringent DDP apply: • Info in possession of RFI • Publicly available info • If no (Value or balance exceeds USD 1m) • Self certification (from AH or CP) • If not, indicia search is used

  35. DDP for Preexisting Entity Accounts DDP for Preexisting Entity Accounts – In relation to AH

  36. DDP for Preexisting Entity Accounts DDP for Preexisting Entity Accounts – In relation to Controlling Persons

  37. DDP for New Entity Accounts In relation to account holder Two steps: • Is the entity AH a Reportable Person? • In case of PNFE, is any of the Controlling Persons a RP? • RP status: Determined on the basis of: • Info in possession of RFI or publicly available or • Self certification

  38. DDP for New Entity Accounts In relation to controlling person Two steps: • Identify whether or not the entity is a PNFE and • If so, determine its Controlling Persons Test applicable regardless of whether or not the entity was determined as a Reportable Person. Status of the entity: is it a PNFE? • Info in possession of RFI, Publicly available info or Self certification • If not possible to determine the status as Active NFE or a FI, RFI must presume that AH is PNFE Determination and status of CP: • Only on the basis of self certification (from AH or CP)

  39. Reportable Information Reportable information should identify: • The Account Holder (Identification Info) • The Account and RFI (Account Info) • The activity in the account (Financial Info)

  40. Identification Info • Additional information required to be reported in relation to Individuals/Controlling Persons only::

  41. Account and Financial Information • For all Accounts

  42. Financial info • For Depository Accounts only • The total gross amount of interest paid or credited to the account • For Other Accounts • For Custodial Accounts only

  43. The circular

  44. Qatari approach to crs implementation Legal basis • No domestic law • Instead, the MCAA will be treated as an international agreement • A circular will identify the options taken by the State of Qatar • Enforcement based on regulators’ powers Two-tier approach

  45. The circular Preexisting Account: • Account maintained on 30 June 2017 or • A new account of a preexisting customer (subject to conditions) [para. 81 of Commentary on section VIII of CRS] New Account: opened as of 1 July 2017 Lower Value Preexisting Individual Accounts: balance as at 30 June 2017 Higher Value Preexisting Individual Accounts: balance as at 30 June 2017

  46. The circular Possibility for regulators to allow the use of third party services to perform the DDP. FIs remain, however, accountable in case of default Possibility to DDP for New Accounts to Preexisting Accounts and DDP for Higher Value Accounts to Lower Value Accounts Possibility to use the “Residence Test” for Preexisting Lower Value Individual Accounts Reporting Obligations • FI are required to report the info to the regulator by 31 July of the year following the year to which the data relate • Nil returns are required if no information to report • Possibility to use third party services to report, but FI remains responsible • Regulator to send info to the competent authority

  47. The circular CA to coordinate with Regulators to ensure that: • FI do not adopt any measures to circumvent their obligations • NRFIs and Excluded Accounts are still low risk from tax evasion perspective Regulators to ensure that FIs maintain for at least a record of all procedures, measures and guides adopted to implement CRS obligations. CA may request to see those records. Regulators to enforce the penalties provided for in the laws governing their activities in case of non-compliance by a FI

  48. The circular Transitional provisions • For 2017, gross proceeds are not required to be reported • If a preexisting individual account becomes high value after 30/06/2017, enhanced DDP have to be completed before the end of the year following that in which the account became high value • DDP for Low Value Preexisting Individual Accounts have to be completed by 30 June 2019 and be reported on by 31 July 2019 • DDP for High Value Preexisting Individual Accounts have to be completed by 30 June 2018 and be reported on by 31 July 2018 • Preexisting Entity Account with a balance of USD 250K or less are not required to be reviewed (FI may elect otherwise) • DDP for Preexisting Entity Accounts with a balance of more than USD 250K as at 30 June 2017 must be completed by 30 June 2019 and be reported on by 31 July 2019 • DDP for Entity Accounts with a balance that exceeds USD 250Kafter 30 June 2017 must be completed by 30 June of the second year following that in which the USD 250K threshold was exceeded and be reported on by 31 July of the same year

  49. The circular NRFIs • Qatar Foundation • QCSD • QE • Pension Authority • Investment Committee of Civil and Military Pension Funds • Civil and Military Pension Funds • Zakat Fund • Awqaf • Credit Card issuers who become qualified after 30 June 2017.

  50. The circular Excluded Accounts • Depository Accounts that become qualifying after 1 July 2017 • Any other account determined by the CA in coordination with the regulators, provided it does not entail a significant tax evasion risk Reportable jurisdictions • Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, China, Czech rep., Denmark, Faroe Island, Finland, France, Germany, Greece, Greenland, Guernsey, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Italy, Japan, Jersey, Korea rep., Latvia, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Monaco, Netherlands, New Zealand, Norway, Poland, Portugal, Russia, San Marino, Saudi Arabia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, UK and Uruguay

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