The Foreign Accounts Tax Compliance Act ("FATCA") is a significant structural step in governments’ efforts to improve global tax compliance. FATCA aims to promote cross border tax compliance by implementing an international standard for the automatic exchange of tax information relating to US investors. The provisions call on tax authorities all over the world to obtain detailed account information from Financial Institutions ("FI’s") relating to US investors and exchange that information automatically with the United States Internal Revenue Service ("IRS") on an annual basis.
The OECD has recently taken further steps to improve global cross border tax compliance by releasing the Common Reporting Standard ("CRS"). The CRS is a set of global standards for the annual exchange of financial information by FI’s pertaining to customers, to the tax authorities of the jurisdictions in which those customers are resident for tax purposes. Over 65 countries including Cyprus, have already publically committed to adhering to these standards which have an implementation date of 1 January 2016.
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