Study On Automatic Exchange Of Financial Information In Tax Matters

Since 2012,major changes have been taking place in the field of tax information exchange.The international treaties and agreements on automatic information exchange have been issued one after another especially the Standard for Automatic Exchange of Financial Account Information in Tax Matters(the "Standard")issued by the Organization for Economic Co-operation and Development(OECD)in June 2014.The standard that include the Competent Authority Agreement(CAA)and the Common Reporting Standard(CRS)marks the initial formation of international rules for the Automatic Exchange of Information.As the number of jurisdictions committed to implementing the standards has grown rapidly,the global impact of the exchange of information has become increasingly apparent.So have the challenges facing financial institutions.Financial institutions not only need to ensure the accuracy of the information provided by the account holders,but also provide corresponding support in terms of the confidentiality of information,the participation rights of account holders and the rights of taxpayers.This article focuses on the implementation of automatic exchange of financial account information in tax matters from the perspective of financial institutions,and summarizes the three major problems that CRS emerges after landing in various jurisdictions:the cost of implementing financial institutions,the problems in the due diligence process and the issue of taxpayers'rights protection.This article believes that although the CRS developed by the OECD can guide the jurisdiction to implement it,it cannot solve the problem of the interpretation of the concepts when financial institutions and tax authorities apply the law.In the due diligence process,financial institutions not only bear the responsibility of collecting account holder information,identifying the actual controller and reporting it to the tax authorities,but also ensuring the accuracy of the data.At the same time,the account holder is also a taxpayer,and the tax authorities' obligation to protect the rights of taxpayers is also partially passed on to financial institutions.Therefore,in the process of automatic information exchange,financial institutions need to balance the accuracy of data with the protection of taxpayers' rights.As a member of the G20,China actively advocates and promotes the construction of international tax transparency.In December 2015,China signed an agreement to implement the CRS.The Measures for the Administration of Due Diligence of Tax Information on Non-Resident Financial Accounts(the"Administrative Measures")marks the landing of China's CRS.However,there are still many problems in the Administrative Measures,such as,the ambiguous definition of negative non-financial institutions and improper connection with the Tax Administration Law.This article believes that the competent authority should introduce a series of laws and regulations to cooperate with the implementation of the Administrative Measures.At the same time,it should pay attention to the construction of the taxpayer's rights guarantee system.In particular,the protection of taxpayers'rights in cross-border information exchange should be incorporated into the domestic law system.