UK and International Tax news

Jurisdictions Take Action To Address Potential Misuse From RBI/CBI Schemes For CRS Circumvention Purposes

Tuesday 23rd October 2018

Further to last week’s announcement from the OECD and its analysis of residence and citizenship by investment [RBI/CBI] schemes offered by CRS committed jurisdictions, the OECD has now updated the list of territories with schemes that potentially pose a high risk to the integrity of CRS.

RBI/CBI schemes, often referred to as golden passports or visas, can create the potential for misuse as tools to hide assets held abroad from reporting under the OECD/G20 Common Reporting Standard.

In particular, identity cards, residence permits and other documentation obtained through RBI/CBI schemes can potentially be abused to misrepresent an individual’s jurisdiction(s) of tax residence and to endanger the proper operation of the CRS due diligence procedures.

Last week the OECD published the results of its analysis of over 100 RBI/CBI schemes offered by CRS-committed jurisdictions, identifying those schemes that potentially pose a high-risk to the integrity of CRS. These schemes give access to a low personal tax rate on income from foreign financial assets and do not require an individual to spend a significant amount of time in the jurisdiction offering the scheme

The OECD has now confirmed that a number of jurisdictions are taking further action to prevent the misuse of RBI/CBI schemes by account holders by putting in place an exchange of information mechanism that will ensure that the information on applicants of RBI/CBI schemes will be made available to their jurisdiction(s) of tax residence.

As a consequence of this action and further assurances and clarifications provided, certain RBI/CBI schemes have been removed from the OECD list. The list now includes schemes operated by Antigua and Barbuda, The Bahamas, Bahrain, Barbados, Cyprus, Dominica, Granada, Malaysia, Malta, Panama, Qatar, Saint Kitts and Nevis, Saint Lucia, Seychelles, Turks and Caicos Islands, United Arab Emirates and Vanuatu.

The OECD is engaging with several more jurisdictions and will reflect any relevant developments in its guidance on an ongoing basis.

If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.

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