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UAE banks notify expats on anti-tax evasion policy
Dubai: Expatriates in the UAE have been alerted about the implementation of a new global transparency policy that seeks to fight cross-border tax evasion and put an end to banking secrecy in tax matters.
Countries around the world have been looking for ways to track down and monitor tax-delinquent residents overseas. Offshore tax abuse is reportedly costing America alone $100 billion a year.
This has resulted in the launch of the common reporting standard (CRS), also referred to as the global FATCA, which stands for Foreign Account Tax Compliance Act in the United States (US).
FATCA is a similar but separate piece of legislation which is directed mainly at American citizens residing abroad. CRS, on the other hand, is being spearheaded by the Overseas Economic Cooperation and Development (OECD) and includes European Union and other signatory states, such as the UAE, India, United Kingdom, Canada, Lebanon, Indonesia, Turkey and Mexico, among many others.
CRS aims to foster an exchange of information between countries regarding expatriate or individual bank accounts, interest, dividends or incomes earned outside their home country.
"Tax cheats have nowhere left to hide," OECD secretary-general Angel Gurria said during the launch of CRS.
In compliance with the global tax compliance regulation, financial institutions in the country will start collecting next year the necessary tax-related information from customers.
“From the beginning of January 2017, governments will start requiring all banks and other financial institutions to ask customers for information with a view to determining where they are resident for tax purposes,” HSBC stated in its December 8 letter to its customers.
“[The bank] is committed to protecting the integrity of tax systems and preventing financial crime of all types and will fully comply with these new laws. Therefore, from the beginning of 2017 onwards, we will be contacting some of our customers to collect information related to their tax status.”
The impact of the new regulation will depend on the type of accounts held by expats or where they live or operate as a business, among others. “Don’t worry, we will contact you if you are affected and will confirm what you need to do to make sure that we correctly identify where you are tax resident,” the bank said on its website.
It is not clear what type of information the bank will require from its customers, but it will most likely include taxpayer identification numbers or social security/national insurance numbers.
HSBC said that even if customers have already provided information under the United States' FATCA, account holders may still need to provide additional information for the CRS as the two regulations are different.
Countries currently participating in CRS:
Argentina, Belgium, Bermuda, British Virgin Islands, Cayman Islands, the Czech Republic, France, Germany, Greece, Guernsey, India, Ireland, Isle of Man, Italy, Jersey, Luxembourg, Malta, Mexico, Netherlands, Poland, South Africa, South Korea, Spain, Sweden, United Kingdom
Countries participating in CRS from 1 January 2017 onwards:
Australia, Bahamas, Bahrain, Brazil, Brunei, Darussalam, Canada, Chile, China, The Cook Islands, Hong Kong, Indonesia, Israel, Japan, Kuwait, Lebanon, Macau, Malaysia, Mauritius, Monaco, New Zealand, Panama, Qatar, Russia, Saudi Arabia, Singapore, Switzerland, Turkey, UAE, Uruguay
Not currently committed to participating in CRS:
Sri Lanka, Taiwan, Philippines, Thailand, Algeria, Armenia, Bangladesh, Egypt, Maldives, Oman, Palestine, Turkish Republic of Northern Cyprus, US, Vietnam
Source: HSBC
Dubai: Expatriates in the UAE have been alerted about the implementation of a new global transparency policy that seeks to fight cross-border tax evasion and put an end to banking secrecy in tax matters.
Countries around the world have been looking for ways to track down and monitor tax-delinquent residents overseas. Offshore tax abuse is reportedly costing America alone $100 billion a year.
This has resulted in the launch of the common reporting standard (CRS), also referred to as the global FATCA, which stands for Foreign Account Tax Compliance Act in the United States (US).
FATCA is a similar but separate piece of legislation which is directed mainly at American citizens residing abroad. CRS, on the other hand, is being spearheaded by the Overseas Economic Cooperation and Development (OECD) and includes European Union and other signatory states, such as the UAE, India, United Kingdom, Canada, Lebanon, Indonesia, Turkey and Mexico, among many others.
CRS aims to foster an exchange of information between countries regarding expatriate or individual bank accounts, interest, dividends or incomes earned outside their home country.
"Tax cheats have nowhere left to hide," OECD secretary-general Angel Gurria said during the launch of CRS.
In compliance with the global tax compliance regulation, financial institutions in the country will start collecting next year the necessary tax-related information from customers.
“From the beginning of January 2017, governments will start requiring all banks and other financial institutions to ask customers for information with a view to determining where they are resident for tax purposes,” HSBC stated in its December 8 letter to its customers.
“[The bank] is committed to protecting the integrity of tax systems and preventing financial crime of all types and will fully comply with these new laws. Therefore, from the beginning of 2017 onwards, we will be contacting some of our customers to collect information related to their tax status.”
The impact of the new regulation will depend on the type of accounts held by expats or where they live or operate as a business, among others. “Don’t worry, we will contact you if you are affected and will confirm what you need to do to make sure that we correctly identify where you are tax resident,” the bank said on its website.
It is not clear what type of information the bank will require from its customers, but it will most likely include taxpayer identification numbers or social security/national insurance numbers.
HSBC said that even if customers have already provided information under the United States' FATCA, account holders may still need to provide additional information for the CRS as the two regulations are different.
Countries currently participating in CRS:
Argentina, Belgium, Bermuda, British Virgin Islands, Cayman Islands, the Czech Republic, France, Germany, Greece, Guernsey, India, Ireland, Isle of Man, Italy, Jersey, Luxembourg, Malta, Mexico, Netherlands, Poland, South Africa, South Korea, Spain, Sweden, United Kingdom
Countries participating in CRS from 1 January 2017 onwards:
Australia, Bahamas, Bahrain, Brazil, Brunei, Darussalam, Canada, Chile, China, The Cook Islands, Hong Kong, Indonesia, Israel, Japan, Kuwait, Lebanon, Macau, Malaysia, Mauritius, Monaco, New Zealand, Panama, Qatar, Russia, Saudi Arabia, Singapore, Switzerland, Turkey, UAE, Uruguay
Not currently committed to participating in CRS:
Sri Lanka, Taiwan, Philippines, Thailand, Algeria, Armenia, Bangladesh, Egypt, Maldives, Oman, Palestine, Turkish Republic of Northern Cyprus, US, Vietnam
Source: HSBC