Wealth Solutions & Wealth Planning
Are we ready for the 'CRS typhoon' in Asia?
Nov 28, 2016
Speaking at the Hubbis Asian Family Wealth Forum 2016 in Singapore in November - Eric Boes of Amicorp Group discussed the latest developments and required levels of preparedness in Asia in terms of global transparency initiatives.
[photo]882[/photo]The level of readiness in the face of the requirements stemming from the Common Reporting Standard (CRS) and tax transparency initiatives varies widely among financial institutions in Asia.
But there is little time to waste given that this is what Eric Boes, global head of FATCA & CRS services and solutions at Amicorp Group, calls a “game changer” in the way the industry is organised.
CRS will come to Asia on 1 January 2017, bringing with it several transparency and regulatory-related developments. (Some Asian countries are joining the Multilateral Convention which is a basis for them to commit later on to CRS.)
These include, for example, the fact that ultimate beneficial owners (UBOs), including settlors, will be reported.
Further, many Asia countries are changing local tax rules for individuals who hold passive offshore entities, says Boes (CFC, POEM, GAAR, but also gift tax, estate tax).
The relevant regulators in Singapore (with Hong Kong expected to follow) will strengthen policy measures and audits against money laundering and tax evasion. Plus, they are now also taking measures to close down some banks and funds.
At the same time, the FATF and OECD will work together to create a global standard for registering and exchanging UBO data to relevant authorities, to jointly fight money laundering and tax evasion.
Far-reaching implications
Financial institutions must therefore ensure tax compliance as well as prepare for extra compliance going forward, he explains. “Tax evasion is a crime for the taxpayer and the provider.”
Institutions will essentially need to become CRS tax agents, he adds, to collect information, identify any red flags, and do the required reporting.
In terms of AML, in particular, they will need to collect information on the UBO as part of the KYC process and via tax compliance forms.
As part of such efforts to support clients in maintaining compliance, financial institutions and wealth managers will also need to push undeclared clients for tax amnesty, or terminate relationships, adds Boes.
From a wealth structuring perspective, he says this will need to be done on a case-by-case and more tailor-made basis – although trusts, foundations and funds are still alive.
“This will lead to a renewed focus [by financial institutions] on core offerings and competencies,” says Boes.
In terms of the impact of global (tax) transparency on HNWIs, meanwhile, Boes says there is a high chance that the information of the UBO will be reported.
There are a few ways he says that they can ensure adequate tax disclosure in their home country: via tax amnesties via voluntary disclosure programmes, and through sustainable structuring which is more non-fiscal driven. This includes focusing on asset protection, estate and succession planning and diversification; onshore vs offshore; and trusts, foundations, funds and life insurance.
Click on the ‘PDF’ link above to view the presentation slides.
Global Head of FATCA & CRS Services and Solutions at Amicorp Group
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