CRS Self-Certification for Corporate Accounts FAQs

CENTRAL, Hong Kong - Aug. 15, 2017 - PRLog -- Hong Kong has enacted CRS and specified 75 jurisdictions with which financial account information is to be exchanged starting from 2018. The first reporting period however falls into 2017 and for UK and Japanese account holders is from 1^st January 2017 to 31^st December 2017. The first reporting period for other jurisdictions specified by the IRD is from 1^st July 2017 to 31^st December 2017.

The exchange of information with other countries requires a Competent Authority Agreement to be ratified before any information can be transmitted by the Hong Kong tax authority to their overseas counterparts. However, financial institutions are required to report to the Hong Kong tax authority the account balances or values of any accounts the account holder of which is a resident in any of the 74 jurisdictions, regardless whether a Competent Authority Agreement is already in place.

With the CRS reporting date for financial institutions fast approaching and therefore the requirement to collect account information of reportable accounts, many existing account holders or persons and companies wishing to open new bank accounts are presented with an additional form to complete. As with FATCA reporting forms, the account holder or applicant is often left with no explanation what the form is for and how it is to be completed.

CRS depends on a self-certification form that is not designed by a single jurisdiction and each participating jurisdiction may have a different format, unlike FATCA. The self-certification form should be accompanied by a list of definitions of the CRS terminology. We have combined the most frequently asked questions to the classifications and completion of entity self-certification forms hereunder.

Why am I being asked to complete a self-certification form?

Reporting financial institutions will be liable for reporting on financial accounts held by reportable persons. The Inland Revenue Ordinance ("IRO") requires the reporting financial institutions to apply due diligence procedures to collect all required information and documentation from account holders.  To identify reportable persons, reporting financial institutions may ask account holders to complete self-certification forms for verification of their tax residency status.

According to the due diligence procedures set out in the Ordinance, self-certifications would be required from account holders for all new accounts and for pre-existing accounts a financial institution may be unclear about the tax residence of the account holder. Given the reporting liability of financial institutions, it is likely that financial institutions will require all pre-existing entity accounts to provide a self-certification form, rather than applying a selective approach.

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