Interpretation Of CRS: What Are The Tax Implications Of The Groups Involved?

In the shouting of "wolf coming", various interpretations of CRS are all over the world.

Therefore, I want to comb out the basic connotation of CRS and discuss the tax compliance concerns of stakeholders by exploring the tax impact caused by CRS.

One day, I received a friend's inquiry. After the implementation of CRS, a bank account of more than 6 million yuan will be declared. What should I do? I asked him if you have overseas bank accounts or other financial assets. He said no.

I asked again, "are you not a Chinese citizen?" he said, a Chinese citizen.

I told this friend that the declaration of CRS has nothing to do with you, because CRS involves only "non resident" financial accounts.

As Chinese people establish accounts in China, they belong to "residents".

It is not the scope of CRS declaration.

We need to know that the CRS agreement countries or regions will collect the declaration information according to the OECD's norm. Fan Benzhong's financial assets related to declarations can be roughly summarized as follows: the cash and financial products of non residents in the agreement country / region bank accounts, the insurance products purchased by the insurance institutions, the LP investment share in the established investment funds, the trust established, and the cash and financial products of the overseas companies in the agreement country / regional bank accounts established by non residents.

It is worth noting that OECD's model did not set the minimum amount of declaration for assets. It only divided the financial institutions' implementation of customer due diligence by 1 million US dollars. This is what we saw in the "tax management information on non resident financial accounts (DIS) information management (Draft)" drafted by the Chinese tax authorities in the 6 million yuan account balance to differentiate the source of different procedures.

In the interpretation of some CRS, more than 6 million yuan accounts are said to be the object of tax inspection, or it is wrong to think that individuals can split accounts to less than 6 million yuan to avoid declaring.

China's "personal income tax law" stipulates that Chinese residents should declare their personal income tax on their global income.

The third party information announced by CRS will help tax authorities understand the taxpayers' income and strengthen the collection and management.

Therefore, Chinese residents who should have declared and paid taxes on global income must pay attention to their tax compliance.

At the same time,

The tax compliance is more than personal.

As mentioned above, the overseas company accounts established by individuals are also part of the CRS declaration. After receiving the information returned by CRS, the tax authorities may notice that some overseas companies are in fact related to a Chinese enterprise and further inquire about the tax arrangements related to enterprises (such as whether the pfer pricing between the affiliated enterprises is reasonable).

For CRS's response, we must first understand that information reporting does not mean full tax payment, because the income of some financial assets is not tax related (such as insurance investment income).

Therefore, your own assets

Know something about it instead of avoiding it.

Secondly, although there is no relevant anti avoidance provisions in China's personal income tax law at present.

But the concept of "substance over form" has been widely accepted by tax authorities in various countries.

Therefore, personal tax planning for CRS must follow this idea, instead of simply doing some arrangements which even can not be explained by itself, such as claiming to be a citizen of other countries, but living in China all day long.

People with overseas business accounts should also assess the tax impact of their overseas account information after the official implementation of CRS, and actively improve their own tax compliance.

With the rapid development of global digitalization, the automatic exchange of financial account information between countries is just around the corner.

This indicates that tax collection and administration in various countries will enter a new era.

While paying attention to the landing of CRS, China's high net worth people should pay close attention to the implementation process of personal tax avoidance by Chinese tax authorities, and make reasonable plans according to their own characteristics and family characteristics, so as to face the new tax era smoothly.

At that time, the word "relieving" will apply to every high net worth person who is actively facing and planning rationally.

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