As tax authorities in developing countries seek additional tax revenue streams, the OECD’s exchange of information standards presents considerable potential. However, with less mature tax infrastructure, these jurisdictions must overcome unique obstacles in order to implement the exchange standards.
The Common Reporting Standard (CRS) is an OECD information requirement within the automatic exchange of information (AEOI) initiative. Countries committing to the regulation must gather information from financial institutions and automatically exchange the information with participating jurisdictions.
CRS regulations provide a unique opportunity for tax authorities in developing countries to encourage disclosure, strengthen tax compliance, and consequently increase tax revenue.
These countries face unique obstacles in introducing and implementing the changes necessary to meet these complex requirements. However, as set out below, a number of our clients have not just overcome these challenges but have surpassed them in complying with the international standards.
Nigeria’s tax authority – the Federal Inland Revenue Service (FIRS) – partnered with Vizor in March 2020 in order to implement a solution for its first CRS exchanges.
‘’We selected Vizor AEOI due to their expertise, not just in the area of IT, but also in international taxation obligations, as well as their prior experience of working with African government authorities,’’ says Femi Edgal, Deputy Director and Head of the Exchange of Information at FIRS.
FIRS fully implemented the AEOI platform to fulfil its CRS compliance. This resulted in financial institutions filing their first annual returns for AEOI-CRS in Nigeria in September 2020.
The Nigeria project was delivered fully remotely, showing that even with physical and travel restrictions in place, Vizor supports tax authorities with developing their information exchange plans.
“Despite the obvious challenges posed by the pandemic and the new world we now operate in, thanks to the excellent cooperation on both sides, we are delighted to see the project reach go-live,’’ adds Edgal.
After a rigorous selection process, in December 2019, the government of Oman selected Vizor's AEOI solution to implement a platform to manage its AEOI commitments set out under CRS and Country-by-Country (CbC) Reporting. The first CRS exchange originally scheduled for September 2020, was pushed back to December on account of the Covid-19 pandemic.
‘’We selected Vizor AEOI based both on the user-friendliness of the solution as well as their track record of success with tax authorities not just in the region but globally,” says Said Ahmed Al Shanfari, Director of Tax Agreements at Oman’s tax authority.
The implementation was delivered in partnership with a leading Omani technology services company, Software Systems LLC (SSL), with the Vizor team working remotely for the whole duration of the project.
The solution provides a user-friendly software platform that allows the tax authority to meet its full set of international tax information sharing commitments including FATCA, CRS, CbC, ETR and Economic Substance Reporting requirements. It also offers an Analytics Module enabling further data analysis and sophisticated data reporting.
“We are delighted to see the project reach go-live ensuring we meet our exchange commitments on time with the highest quality data and ultimately ensuring that Oman maintains a well-regulated and transparent environment,” adds Al Shanfari.
Panama and the US signed an agreement to improve international tax compliance with respect to Foreign Account Tax Compliance Act (FATCA) in 2016.
The country also committed to meeting the CRS and needed a solution to gather returns from financial institutions and facilitate the transmission of information to the US Internal Revenue Service (IRS).
Panama’s Ministry of Economy and Finance chose Vizor’s AEOI Solution to meet these requirements in 2017. The tailored project included self-registration and account creation for financial institutions, extensive validation of FATCA data, and little or no manual interaction with the system.
“We are proud to be helping Panama further their mission to promote tax transparency and fight against tax evasion”, says Conor Crowley, CEO of Vizor Software.
Pakistan signalled its intent to fight offshore tax evasion and avoidance in 2016. The country is also a member of the OECD’s BEPS inclusive framework and required the automatic exchange of CbC Reporting under Action 13 of the framework.
In March 2018, the Federal Board of Revenue (FBR) selected Vizor to provide a solution that meets its obligations in a short time frame. The AEOI solution allows the FBR to use a single software platform and includes support for all requirements.
The tailored project incorporated self-registration and account creation for financial institutions and multinational enterprises, extensive validation of CRS data, and configuration options for running in ‘fully automated' mode.
This helped Pakistan to carry out its first exchanges of information to partner jurisdictions from 2018 and comply with changes to global standards.
“Vizor is proud to have been selected by Pakistan for this project,” notes Conor Crowley, CEO of Vizor Software. “With over ten jurisdictions already using the Vizor AEOI solution, our team has the depth of experience needed to help Pakistan meet its go-live commitments this year .”
We continue to support tax authorities in developing countries in meeting international tax transparency standards by providing end-to-end bespoke solutions. Our services also include keeping up to date with changes to guidelines and data requirements at no additional cost.
To find out more on how we can help developing countries in introducing, facilitating, and implementing CRS, AEOI, FATCA, and other requirements, request a demo of Vizor’s exchange of information solutions for tax authorities.