Are you prepared for the AEOI requirements in 2021? KPMG in the Crown Dependencies Tuesday 2 March 2021 10.00am – 11.00am Introduction Tony Mancini, Tax Partner Webinar presenters Tony Mancini Chris Lowe Clare Kelly Tax Partner Tax Director Tax Senior Manager KPMG in the Crown Dependencies KPMG in the Crown Dependencies KPMG in the Crown Dependencies Guernsey Jersey Isle of Man [email protected] [email protected] [email protected] Agenda — FATCA & CRS overview — Island specific updates — Considerations for FIs to demonstrate compliance with the Regulations — OECD Mandatory Disclosure Rules on CRS Avoidance Arrangements and Opaque Offshore Structures — How KPMG can help you navigate these challenges — Thoughts on how the FATCA/CRS rules might evolve in the future © 2021 KPMG Channel Islands Limited, a Jersey company and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, 4 a private English company limited by guarantee. All rights reserved. Document Classification: KPMG Public Guernsey update Tony Mancini, Tax Partner Notable changes to IGOR — The CRS XML Schema Version 1.0 and User Guide Version 2.0 applicable for all CRS exchanges is replaced by CRS XML Schema Version 2.0 and CRS User Guide Version 3.0. — Commencing with the 2020 reporting period, the Director will require all Reporting Financial Institutions, within the meaning of the CRS and FATCA Regulations, to classify what type of reporting institution they are. — Commencing with the reporting of 2020 CRS & FATCA data Financial Institutions will be required to confirm that all reports submitted (inclusive of nil reports) complies with the relevant Regulations by completing a Compliance Statement. — A report submitted without a Compliance Statement will be identified as an incomplete submission and will require completion of the Compliance Statement. — There are increased powers by the Guernsey Revenue Service to assess compliance by FIs © 2021 KPMG Channel Islands Limited, a Jersey company and KPMG LLC, a limited liability company, and member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 6 Document Classification: KPMG Public Bulletin 2021/3 The purpose of this Bulletin is to inform FI's of changes being introduced regarding FATCA reporting obligations and provide an update on the Compliance Statement Assurance points. Under this Bulletin the following changes will apply for FATCA — Guernsey FIs are required to obtain and report the US TIN for each specified US person that is an account holder or controlling person — If for any reason the FI's cannot obtain a TIN, the IRS has developed a series of codes that can be used to populate the TIN data field. It is strongly recommended that these codes be used. — If a code is not applicable then it is possible to use 9As, however, this may result in an error being notified to the Guernsey FI which will require an explanation and, if necessary, correction of the data thereafter. © 2021 KPMG Channel Islands Limited, a Jersey company and KPMG LLC, a limited liability company, and member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 7 Document Classification: KPMG Public Bulletin 2021/3 – Compliance Assurance Statement The purpose of this Bulletin is to inform FI's of changes being introduced regarding FATCA reporting obligations and provide an update on the Compliance Statement Assurance points. CRS Compliance Assurance Statement 1. All appropriate policies, procedures and systems were in place in order to comply with the CRS Regulations reporting requirements for all financial accounts which it maintained and established during the reporting period. 2. The evidence used to comply with the Schedule 2 due diligence requirements has been retained and a record of the steps taken when performing due diligence reviews on accounts has been made. 3. The evidence used to comply with the due diligence requirements and a record of the steps taken when performing due diligence reviews on accounts will be retained for a minimum period of 6 years. 4. All appropriate policies, procedures and systems are in place to ensure that the tax residency information of Account Holders has been obtained for all New Accounts. 5. All reportable accounts closed during the period covered by the report have been included in the report and identified as such. 6. Only reportable accounts that comply with the “undocumented” criteria have been reported accordingly. 7. The report is full and complete containing all the required reportable details for all reportable accounts for the reporting period. © 2021 KPMG Channel Islands Limited, a Jersey company and KPMG LLC, a limited liability company, and member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 8 Document Classification: KPMG Public Bulletin 2021/3 – Compliance Assurance Statement FATCA Compliance Assurance Statement 1. All appropriate policies, procedures and systems were in place in order to comply with the FATCA Regulations reporting requirements for all financial accounts which it maintained and established during the reporting period. 2. The evidence used to comply with the due diligence requirements and a record of the steps taken when performing due diligence reviews on accounts will be retained for a minimum period of 6 years. 3. All reportable accounts closed during the reporting period have been included in the report and identified as such. 4. The TIN is in a format consistent with Bulletin 2021/3. 5. The report is full and complete containing all the required reportable details for all reportable accounts for the reporting period. © 2021 KPMG Channel Islands Limited, a Jersey company and KPMG LLC, a limited liability company, and member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 9 Document Classification: KPMG Public Isle of Man update Clare Kelly, Senior Manager Isle of Man Update ITD’s focus to date Penalties Recommendations — Voluntary approaches — Can be levied at a rate — Check classifications to ITD by FIs of £300 per reportable (especially where you account where there is made “protective — Thematic issues inaccurate reporting – it registrations” with the identified from can get expensive! IRS) submitted returns — Penalties can be — Check foundations on — Review of compliance reduced through: which your reporting is return voluntary disclosure, co- based operation, timely — Follow up on data actions, extent of the — Sense check your requests from other tax error (ie proportionality) reporting back to source jurisdictions documents © 2021 KPMG Channel Islands Limited, a Jersey company and KPMG LLC, a limited liability company, and member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 11 Document Classification: KPMG Public Jersey Update Chris Lowe, Tax Director Jersey update January 2021 – Version 5 of the practical guidance released for both CRS and FATCA CRS updates — Only Version 2 of the XML schema can be used — Nil returns expected to be mandatory in 2022 in respect of 2021 accounts. Register all entities? FATCA updates — Additional validation checks have been installed on the AEOI portal. Domestic reporting – due to be introduced for banks with the first reporting in 2023 in relation to the 2022 reporting period. © 2021 KPMG Channel Islands Limited, a Jersey company and KPMG LLC, a limited liability company, and member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 13 Document Classification: KPMG Public Considerations for FIs to demonstrate compliance with the Regulations Chris Lowe, Tax Director Why is this important? — Jurisdictions are under pressure from the OECD. — Roll out of compliance program by the local Tax Office. — Shift in approach – emphasis will now be the monitoring of compliance. — Greater sharing of information with the Commission (connection with DD requirements and AML). — Guernsey Compliance Assurance Statements – How does the person submitting this form get comfortable the FI is fully compliant? © 2021 KPMG Channel Islands Limited, a Jersey company and KPMG LLC, a limited liability company, and member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 15 Document Classification: KPMG Public Overview of the OECD guidance to Tax Authorities — OECD released an Automatic Exchange of Information ‘Guide on Promoting and Assessing Compliance by Financial Institutions’. — Identifies Core elements which the OECD expects Financial Institutions to have in place. — For each Core element, the OECD defines key requirements (‘hallmarks’). — Sets out sample questions for Tax Authorities to identify potential risk areas. — Specific guidance for bank, fund and trust industries. — Emphasis on identification