How will it work?
The CRS will be implemented via a combination of multilateral conventions and bilateral competent authority agreements.
In practice, countries that have signed the multilateral convention will approach each other and sign a bilateral agreement.
Each country will then agree to annually provide information on accounts held in that jurisdiction by tax residents of the other.
The agreement they sign is a standard document and does not allow for country specific opt-outs or variances as the US FATCA did.
The view of the OECD is that the standard model benefits the maximum number of jurisdictions and financial institutions, while recognising that certain issues remain to be decided by local implementation.
Furthermore, a proliferation of different and inconsistent models would potentially impose significant costs on both government and business to collect the necessary information and operate the different models.
According to the OECD, the CRS has the potential to relieve certain burdens imposed by the US FATCA but the reality is that until such a time as the CRS replaces the US FATCA, all it is doing is adding another layer of compliance.
