FATCA and CRS: How Ready Are You?
As we enter a new era in global tax reporting with increasing regulations around tax transparency, we need to determine the full picture on the financial market’s readiness for the Common Reporting Standard (CRS) and approach to the Foreign Account Tax Compliance Act (FATCA).
To prepare for the upcoming CRS regulations, internal teams need to be re-structured or new teams created. Relevant expertise should be added internally or outsourced where required.
Companies can create one team that will handle both FATCA and CRS, or two teams to individually handle FATCA and CRS separately. However, the compliance function should be centralized. A drive towards centralization and streamlining the products, processes a, d systems will be a key factor in compliance.
Who should take action?
- Any company engaged in cross border transaction
- Investment banks
- Alternative investment managers
- Consultancy Firms
- Private equity firms
- Regulators
- Retail banks
- Wholesale Banks
- Fund managers
- Insurance Companies
- Software & services suppliers
Main concerns regarding FATCA and CRS include, but are not limited to:
- Financial penalties;
- Time and resources required for various reporting formats;
- The lack of uniform adoption of CRS;
- Client confusion on documents needed and getting customers to respond in a timely manner;
- The impact on customer trust;
- The lack of clarity from regulators regarding terminology and characteristics;
- Reputational risk;
- The lack of clarity as to detail;
- The lack of appropriate software;
- High development/ operational cost for very low volumes of reportable data;
- Limited test facilities;
- Data security;
- Tax authorities do not seem to know how to manage such a global change;
- Difficulty on a country-by-country basis in setting expectations deadlines and filing protocols;
- The lack of data, data inaccuracy or not being able to get the data out of the system;
- Differences in legal, internal and inter-company interpretation;
- Low levels of understanding and engagement from affected parties;
- The lack of appropriate software;
- The lack of uniform adoption of CRS;
- Keeping up with the regulation change;
- The lack of change expertise in smaller organizations; and
- The lack of centralized solutions to handle tax forms.
For assistance or to further discuss FATCA and CRS, please contact a member of Withum’s International Team by filling out the form below.
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