January was a busy month for some financial institutions(FIs) as the Common Reporting Standard (CRS) was implemented on the 1st Jan 2017. The FIs may be banks, specified insurance companies, investment entities and custodial institutions.
For accounts that were opened before 1st Jan 2017, the FIs may contact the account holders to declare their tax residency. This declaration of tax residency will be a standard question in the application forms for any accounts open after 1st Jan 2017. In short, there is nothing you need to do if the FIs did not send you any forms to update your tax residency.
- What is Common Reporting Standard?
The CRS is an internationally agreed standard for the automatic exchange of information on financial accounts between jurisdictions for tax purposes. It is to enhance tax transparency to detect and deter tax evasion through the use of offshore bank accounts.
- How is a person’s tax residency determined?
It is oftenly mistaken that a person’s citizenship is the same as the tax residency.
For the purpose of tax, a person’s citizenship is secondary. In general, the tax residency of an individual is determined by the person’s physical presence or duration of stay in a jurisdiction in a year. You are a tax resident if your stay in that jurisdiction exceed 183 days in a year.
- How CRS works?
Please speak to your tax professional if you need more clarification and for more information on CRS, please visit IRAS.