China Tax/Business News Flash

June 2017, Issue 21

How does China CRS impact high net worth individuals

Recently, the State Administration of Taxation (SAT), the Ministry of Finance and the "one bank and three commissions"  jointly issued the Administrative Measures on Due Diligence Procedures for Non-residents’ Financial Account Information in Tax Matters (the Measures), which earmarks the official implementation in China of the Common Reporting Standards (CRS) relating to the global automatic exchange of financial account information.

The Measures require financial institutions established in China to carry out due diligence procedures on preexisting and new financial accounts starting from July 1, 2017 (specifically, financial institutions should complete due diligence procedures on high value and low value preexisting individual financial accounts  before December 31, 2017 and December 31, 2018, respectively) to identify financial accounts held by non-residents, collect and submit relevant account information. Earlier, China has committed to be the 2rd batch of jurisdictions to implement CRS and will complete the first round of automatic exchange of financial account information by September 2018. In the meantime, the Measures require the account holders (including individuals and entities) to provide relevant information to the financial institutions truly, timely, accurately and completely. Such information includes the tax residency of the account holder or the relevant controlling person.

We have shared our detailed observations on CRS, the Discussion Draft of the Measures, and the main changes between the Measures and its Discussion Draft in our previous China Tax and Business News Flash. In this China Tax and Business News Flash, we will highlight the key points that domestic and overseas high net worth individuals should pay attention to.

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