One of the main streams of income for any government is tax. However, countries discovered that some business entities, as well as individuals, are accommodating their investments in tax evasion to avoid tax reporting and obligation transparently.
As a reaction, countries supported the Automatic Exchange of Information (AEOI) between tax authorities to combat tax evasion for cross-border business and to enforce policies regarding ethical tax practices. Accordingly, G20 has developed an initiative to issue standards related to AEOI.
In 2014, Organisation for Economic Co-operation and Development (OECD) launched a global initiative for the Common Reporting Standard (CRS), which came into use in 2017.
Accordingly, governments signed intergovernmental agreements with OECD regarding the implementation of CRS.
What is CRS?
The Common Reporting Standard (CRS) is an information standard for the automatic exchange of tax and financial information on a global level, which the Organization for Economic Co-operation and Development (OECD) developed in 2014. Its purpose is to combat tax evasion. More than 100 countries had signed an agreement to implement it, with more countries intending to sign later.
What is the relationship between CRS & the Government of Kuwait?
The State of Kuwait represented by the Ministry of Finance signed the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information and Common Reporting Standard (CRS) on August 19, 2016, with the Organization for Economic Co-operation and Development (OECD) to improve international Tax Compliance and the exchange of financial accounts information between more than 100 countries.
What are the entities required to comply with CRS in the State of Kuwait?
Pursuant to the Ministerial Resolution No (46) Of 2017, concerning the additional preliminary guidelines concerning the implementation of the international agreements on tax information exchange, all financial institutions operating in Kuwait shall comply with reporting requirements in accordance with CRS Agreement and meet the Agreement requirements by taking a set of actions as detailed in the above mentioned Ministerial Resolution, within the prescribed time frame.
What are the risks that financial institutions may face due to non-compliance with CRS requirements?
The competent authority of each corresponding country has the right to apply to withhold 30% on certain payments to FFI if those FFI are not committed to the agreement.
Moreover, the financial institution in Kuwait may be subject to local penalties by national authorities such as but not limited to the Kuwait Ministry of Finance, Central Bank of Kuwait, and Capital Markets Authority.
What are the services offered by Baker Tilly Kuwait related to CRS Tax Compliance?
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CRS Assurance Services
As Baker Tilly in Kuwait has two licensed auditors who are registered in the Ministry of Finance as tax auditors, we offer CRS assurance services that cover the following:
- CRS FFI Classification Attestation.
- CRS Reporting Procedures Attestation.
- Issuance of Annual/ On-Demand Compliance Certification for financial institutions about the extent of compliance with CRS requirements and integrity of processes and procedures in place.
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CRS Consulting Services
- Develop CRS Process, Policies, and Procedures Manual.
- Troubleshooting issues related to CRS reporting.
What is the added value of using Baker Tilly Kuwait services regarding CRS?
- Minimize the risk of balances withheld in the corresponding countries that are under the umbrella of CRS agreements.
- Support cross-border business transactions.
- Minimize risks of exposure to financial penalties and sanctions, and thus, save relevant expenses and costs.
- Ensure compliance with the applicable legislative and regulatory requirements related to CRS in the State of Kuwait.
What is the competitive edge of Baker Tilly Kuwait in providing these services?
Baker Tilly Kuwait is distinguished by specialist professional experience and offers the following characteristics carrying added value to our clients as follows:
- Approved licensed auditors in the Kuwait Ministry of Finance
- A global consulting firm operating in the State of Kuwait.
- Bilingual team