What is the automatic exchange of information?
Put simply, it is the commitment by governments to exchange information about financial accounts held by their taxpayers. This includes banks, building societies and life assurance companies.
Governments around the world have become increasingly aware of large amounts of undeclared wealth held by their taxpayers in overseas accounts. Unless voluntarily disclosed, it is possible for individuals to hold overseas accounts without any of the income or profits from such accounts being visible to their domestic tax authorities. Additionally, in recent years there has been a growing intolerance from governments and the public of tax avoidance and tax evasion. As a result, there has been increasing global effort by governments to provide the relevant tax authorities with information which they may use to assess whether individuals or companies are liable to any taxes which have not been paid.
What is FATCA and CRS?
Foreign Account Tax Compliance Act (FATCA) is a US law aimed at US citizens and tax residents who have placed assets overseas and were not declaring this to the US tax authorities. The law affects non-US financial institutions (also known as Foreign Financial Institutions or FFIs) in countries which have signed agreements with the US. FATCA requires FFIs to introduce measures to identify and report US citizens and tax residents who have accounts with them. This includes products offered by Utmost International. FFIs include institutions carrying out activities such as deposit taking, investment services, custody services and investment-based insurance. The main requirements of FATCA came into effect on 1 July 2014.
The Organization of Economic Co-operation and Development (OECD) developed the Common Reporting Standard (CRS) based largely on the FATCA model but involves a far wider range of jurisdictions. CRS came into effect in 2016.
Which countries have signed up to exchange information under the CRS?
The countries committed to exchanging information is subject to change as additional jurisdictions are regularly signing up to take part, but a significant number of jurisdictions have already committed to exchange information under the CRS.
You can find a list of jurisdictions committed to CRS and the status of development of their domestic legislation on the OECD website.
Why do Policyholders/Controlling Persons need to complete a self-certification?
It is a regulatory requirement under the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) that all financial institutions in participating jurisdictions request, obtain, and maintain up to date full tax details for all their Policyholders, and Controlling Persons of Entities where relevant.
The regulations state that full tax details, including the countries of tax residence and relevant Tax Identification Numbers (TIN) must be obtained for all our customers. This information might then be shared with the relevant Tax Authorities for any of our customers that are identified as Reportable Persons.