Draft of the Mandatory Disclosure Rules for Addressing CRS
Following the Bari Declaration issued on 13 May 2017 by G7 Finance Ministers, inviting the OECD to start discussing possible manners to address arrangements aiming to circumvent reporting under the Common Reporting Standard (the “CRS”) or aimed at providing beneficial owners with the shelter of non-transparent structures, on 11 December 2017 the OECD issued draft of the Mandatory Disclosure Rules (the “Rules”).
The Rules aim at providing tax administrations with information on arrangements that (intend) circumvent the CRS and on structures that disguise beneficial owners of assets held offshore.
Rules apply to information related to taxpayers using respective structures or arrangements and all persons involved in setting-up of such arrangements, which will provide to tax authorities with necessary intelligence for their tax compliance activities and for determining future tax policies. Respective information will inter alia include all steps and transactions that form part of arrangement or structure, including key details of respective investment, organisation and persons involved in the arrangement or structure (including also “Intermediaries”).
However, disclosure obligation will not apply to information that is subject to obligatory professional secrecy rules (e.g. attorney-client secrecy rules with certain limitations).
The Rules will apply on all “Intermediaries” – i.e. persons responsible for the design or marketing of the arrangement or structure as well as certain persons that provide assistance or advice with that respect.
Disclosure obligation will apply only to those “Intermediaries” that have a sufficient nexus with the reporting jurisdiction.
An “Intermediary” is obliged to make a disclosure in the moment of: (i) first availability for implementation of an arrangement or structure, or (ii) providing service(s) in respect of arrangement or structure.
Exchange of Information
Jurisdiction where the “Intermediary” made a disclosure will ensure that respective information timely reach the jurisdiction where the relevant taxpayer has residence.
Manner for exchange of information between participating jurisdictions is currently under development.
Finally, it should be noted that Serbia is still not member of the OECD and is not participant in the CRS.
Full text of OECD’s brief explanation (FAQs) of model Mandatory Disclosure Rules for Addressing CRS Avoidance Arrangements and Opaque Offshore Structures is available [here].