To prevent persons from evading tax through offshore financial accounts, dozens of countries have implemented the Common Reporting Standard（CRS）, a global information-sharing system built by the Organization for Economic Cooperation and Development（OECD）. Taiwan has promulgated the Regulations Governing the Implementation of the Common Standard on Reporting and Due Diligence for Financial Institutions（”the Regulations”） on November 16, 2017 ,and concluded tax information exchange treaties/agreements with Japan and Australia.
In June 2020, Financial Institutions have reported Financial Account information to the tax authorities in accordance with the provisions in the Regulations, and in September 2020, Taiwan has exchanged Financial Account Information with Japan and Australia. The Ministry of Financial said it was discussing the matters relating to tax information exchange with many countries. Therefore, it is predictable that Taiwan will exchange Financial Account Information with other countries besides Japan and Australia. As a consequence, the Regulations becomes one of the crucial laws that international investors need to know.
Here are some of the common questions about the Regulations:
- Who shall report account information in tax matters to the tax authorities?
Any Financial Institution in the territory of the Republic of China, including a Depository Institution, a Custodial Institution, an Investment Entity, and a Specified Insurance Company. But a Financial Institution is exempted from the obligation of performing due diligence and reporting requirements if any of the criteria of Article 3 of The Regulations is met.
- What does the term “Financial Account” referred to in The Regulations mean?
The term “Financial Account” referred to in The Regulations means an account maintained by a Financial Institution, including a Depository Account, a Custodial Account, an equity or debt interest, a Cash Value Insurance Contract, and an Annuity Insurance Contract.
or an account that meets any of the following requirements, other than an Excluded Account described in Article 23 of The Regulations.
- What kind of account shall be reported by Financial Institution?
An account held or jointly held by Reportable Persons or by a Passive Non-Financial Entity with Controlling Persons that are Reportable Persons, provided that it has been identified as such pursuant to the due diligence procedures described in Section 3 of The Regulations.
The term “Reportable Person” referred to in these Regulations means a resident regulated by tax laws in a Reportable Jurisdiction, or an estate of a decedent that was a resident of a Reportable Jurisdiction.
- What kind of information shall be reported by Financial Institution?
- The name, address, countries or jurisdictions of residences and Tax Identification Number of an Account Holder of the account.
- The account number or functional equivalent.
- The name and business administration number of the Reporting Financial Institution.
- The account balance or value or, if the account was closed during the calendar year, the closure of the account.
- In the case of a Custodial Account, the following information shall be included:
- The total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in such account, in each case paid or credited to, or with respect to the account during a calendar year.
- The total gross proceeds from the sale or redemption of Financial Assets paid or credited to such account during a calendar year with respect to which the Reporting Financial Institution acted as a custodian, broker, nominee, or otherwise as an agent for the Account Holder.
- The total gross amount of interest paid or credited to a Depository Account during a calendar year.
- The information reported shall identify the currency in which each amount is denominated.
*For more details about “Regulations Governing the Implementation of the Common Standard on Reporting and Due Diligence for Financial Institutions“, please refer to https://law.moj.gov.tw/LawClass/LawAll.aspx?pcode=G0340147
