What if I told you that if, for example, you reside in Hong Kong, opening a bank account in the British Virgin Islands won’t grant you one of the main benefits of opening an offshore bank account, which is privacy/secrecy, provided that you appear on the banking documents as the signatory or beneficiary of the account.
In the first example, that is because the BVI share banking information to Hong Kong of those Hong Kong residents who have a Bank Account in BVI in order for Hong Kong to fight tax evasion.
Sames goes if you reside in Spain, France, Italy, and you open an offshore bank account in Switzerland or Singapore, just to name a few examples
In Layman's terms, the Common Reporting Standards is an “agreement” developed by the OECD where the jurisdictions share, autormatically, financial (banking) information of a tax resident in the second jurisdiction (the receipient jurisdiction)
The Common Reporting Standards “..set out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.”
Most countries have subscribed the Common Reporting Standards (CRS). CRS is an agreement between countries where Country A reports to Country B bank accounts held in Country A by a tax resident in Country B, provided that Country A has an agreement to share this information with Country B. This information is most of the time shared automatically at the end of the year.
The fact that Country A shares information with Country B does not mean that Country B will share banking information of tax residents in Country A with Country A tax authority. (No reciprocity).
For example, (a real example), due to the CRS, the British Virgin Islands shares to Hong Kong the banking information of those persons and/or entity representative that BVI Banks have determined they have their tax residency in Hong Kong; on the other hand, Hong Kong does not share banking to BVI of those BVI residents that have a bank account in Hong Kong.
BVI to Hong Kong
Hong Kong to BVI
That is because the BVI is mostly a tax haven so there is not need for a foreign country to report financial information of tax residents in the BVI to the BVI tax authorities.
Where to see the full list of countries that shares banking information:
You can confirm which countries share banking information to which country through the following link:
The Common Reporting Standards usually consist of the following:
A model Competent Authority Agreement (CAA), providing the international legal framework for the automatic exchange of CRS information;
The Common Reporting Standard;
The Commentaries on the CAA and the CRS;
The CRS XML Schema User Guide
Which countries are not part of the Common Reporting Standards? (don’t share banking information to any other country based on the CRS)
To confirm if a certain country is Part of the OECD, you can also the link below to confirm if such country is part of it. In the “From Jurisdiction” section select the desired country. If it does not appear, it is not currently part of it.
In the To Jurisction you can confirm if that jurisdiciton chosen shares banking information to an specific country. If you click "Select All" in "To Jurisdiction" section, you will see all the jurisdictions the chosen countries shares information with.
Nonetheless, as of June 2019, these are some countries that are not part of it:
Afghanistan, Algeria, Angola, Bangladesh, Belarus, Benin, Bhutan, Bolivia, Burundi, Central African Republic, Comoros, Congo, Cuba, East Timor, Equatorial Guinea, Eritrea, Ethiopia, Fiji, Georgia, Gambia, Guinea-Bissau, Honduras, Iran, Iraq, Jordan, Kiribati, Kyrgyzstan, Laos, Libya, Malawi, Mali, Mozambique, Myanmar, Namibia, Nepal, Nicaragua, North Korea, Palau, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Somalia, South Sudan, Sri Lanka, Sudan, Suriname, Swaziland, Syria, Taiwan, Tajikistan, Tonga, Turkmenistan, Tuvalu, Uzbekistan, Vatican City State, Venezuela, Vietnam, Yemen, Zambia, Zimbabwe.
Ah, and also the United States of America is not part of it of course.
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About the Author:
Jean Franco Fernández Clark
Corporate & Tax Lawyer.
Speaks English/Spanish/French/Italian/Russian. 我学习汉语。
Disclaimer: Nothing in this article shall be considered legal, financial, or tax advice. If you wish to obtain advice you must address your tax consultant or attorney. The publication of this article is for information purposes only and the content in this article comes from personal experiences and it is not by any means a legal or tax advice. Information may not be updated nor correct. I make no implicit nor explicit representation in regards to the information contained herein.
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