Extra scrutiny to ensure no tax evasion under global reporting system

As China deepens efforts to combat tax evasion under an international regulation, financial institutions will need to scrutinize information and data offered by their wealthy customers over their accounts to ensure compliance, experts said at an industry conference today.  

The Common Reporting Standard, developed by the Organization for Economic Co-operation and Development in 2014, is a data exchange system between different countries to share information about residents’ assets.

In 2016, President Xi Jinping said that China intends to comply with the CRS, the government unveiled a notice in May last year that it would implement the regulations under it.

Domestic financial institutions will have to carry out due diligence on information given by their account holders on their deposit accounts, custody accounts as well as insurance contracts or annuity contracts with cash value starting from July 1, 2017.

More than 100 countries are participating in the automatic data exchange system as they aim to further crack down on offshore tax evasion.

Wang Fang, a senior partner at Dentons Law Firm, advised that wealthy Chinese should plan their family wealth management and take full account of their assets both at home and abroad.