UK and International Tax news

OECD Publishes Analysis Of CRS Avoidance Through CBI/RBI Schemes

Wednesday 17th October 2018

The OECD has published the results of its analysis of over 100 citizenship and residence by investment  [CBI/RBI] schemes offered by CRS committed jurisdictions, identifying those that potentially pose a high risk to the integrity of CRS.

This follows on from the consultative document issued in February 2018 which outlined potential situations where the misuse of CBI/RBI schemes posed a high risk to accurate CRS reporting and sought public input and evidence on the misuse of CBI/RBI schemes and on effective ways for preventing such abuse.

The consultation also contained a wide range of proposals for further addressing the misuse of CBI/RBI schemes, including comprehensive due diligence checks to be carried out as part of the CBI/RBI application process, spontaneous exchange of information about individuals that have obtained residence/citizenship through such a CBI/RBI scheme with their original jurisdictions of tax residence; and strengthened CRS due diligence procedures on financial institutions with respect to high risk accounts.

CBI/RBI 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 CBI/RBI 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.

As part of its work to preserve the integrity of the CRS, the OECD has published the results of its analysis of over 100 CBI/RBI 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.

Such schemes are currently operated by Antigua and Barbuda, The Bahamas, Bahrain, Barbados, Colombia, Cyprus, Dominica, Grenada, Malaysia, Malta, Mauritius, Monaco, Montserrat, Panama, Qatar, Saint Kitts and Nevis, Saint Lucia, Seychelles, Turks and Caicos Islands, United Arab Emirates and Vanuatu.

Together with the results of the analysis, the OECD is also publishing practical guidance that will enable financial institutions to identify and prevent cases of CRS avoidance through the use of such schemes. In particular, where there are doubts regarding the tax residence of a CBI/RBI user, the OECD has recommended further questions that a financial institution may raise with the account holder.

A number of jurisdictions have committed to spontaneously exchanging information regarding users of CBI/RBI schemes with all original jurisdiction(s) of tax residence, which reduces the attractiveness of such schemes as vehicles for CRS avoidance.

The OECD has announced that it will work with CRS-committed jurisdictions, as well as financial institutions, to ensure that the guidance and other OECD measures remain effective in ensuring that foreign income is reported to the actual jurisdiction of residence.


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

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