|
Alex Mackenzie |
The New Zealand Inland Revenue Department has released an official issues paper 'Implementing the global standard on automatic exchange of information' (Issues Paper). The Issues Paper follows New Zealand's announcement on May 7 2014 of its commitment to implement the G20's Automatic Exchange of Information (AEOI) Standard.
The Issues Paper discusses proposals for implementing the Common Reporting Standard (CRS), a component of the AEOI Standard. The CRS sets out rules to be imposed on financial institutions in respect of:
the conduct of due diligence on certain accounts;
the collection of details of financial assets and income; and
reporting the information to the relevant tax authority.
The legal basis for exchange of information will be the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, or alternatively bilateral double tax agreements with countries that are not signatories to the Convention. New Zealand will enact domestic legislation to ensure the effective implementation of and compliance with the reporting and due diligence requirements in the CRS rules.
The Issues Paper seeks public submissions on a range of topics, including:
certain due diligence and reporting obligations under the CRS. In particular, submissions are sought concerning which entities and financial accounts would satisfy the CRS criteria for being non-reporting financial institutions or excluded accounts respectively, and whether reporting financial institutions should conduct due diligence on all non-resident account holders (including those from non-participating jurisdictions) in an effort to save compliance costs;
the timeline for implementation. In particular, submissions are sought concerning possible transitional arrangements or options for phasing in reporting obligations;
the compliance framework. In particular, submissions are sought concerning what anti-avoidance rules should apply to prevent New Zealand reporting financial institutions, persons or intermediaries from circumventing the CRS procedures, and what penalties and procedures should apply when a New Zealand reporting financial institution does not comply with its due diligence and reporting obligations; and
miscellaneous issues in respect of which the CRS provides participating jurisdictions with options as to the content of their domestic laws (for example, whether the annual CRS reporting should be based on a 'tax year', 'calendar year' or otherwise).
With respect to data confidentiality and measures to safeguard sensitive financial information, the Issues Paper notes that the current secrecy rules in the Tax Administration Act 1994 are sufficient for this purpose. The Issues Paper notes that like all participating jurisdictions, New Zealand will be subject to a robust peer review regime, the purpose of which is to inform jurisdictions of with which countries they may safely exchange information.
The Issues Paper proposes a phased implementation of the CRS. Inland Revenue has signalled that it is aiming to have draft legislation tabled in Parliament by July 2016 with enactment following in 2017. Financial institutions are expected to begin conducting due diligence and fulfilling their reporting obligations from July 1 2017. However, Inland Revenue will not begin exchanging information with other tax authorities until September 30 2018.
Alex Mackenzie (alex.mackenzie@russellmcveagh.com)
Russell McVeagh
Tel: +64 9 367 8863
Website: www.russellmcveagh.com
