The Evolution of International Tax Reporting
International tax reporting has evolved greatly in recent years through the implementation of XML reporting frameworks such as Common Reporting Standard (CRS), Foreign Account Tax Compliance Act (FATCA), Country-by-Country Reporting (CbCR) and Mandatory Disclosure Rules (MDR). These reporting frameworks have been introduced to promote transparency and the exchange of information between tax authorities of different countries. The purpose of these reporting frameworks is to track and prevent tax avoidance, money laundering and other financial crimes by individuals and companies operating globally.
The Common Reporting Standard (CRS) was introduced by the Organisation for Economic Cooperation and Development (OECD) in 2014 to ensure that financial institutions report information about their clients’ accounts to their home tax authorities. This information includes personal details of the account holders, account balances, interest, dividends and other income. The CRS framework has been adopted by more than 100 countries and territories, making it the most widely used international tax reporting standard.
The Foreign Account Tax Compliance Act (FATCA) was introduced by the United States government in 2010 to track and report the assets of US citizens and permanent residents abroad. Under FATCA, foreign financial institutions are required to report information about US citizens and permanent residents who have accounts with them to the Internal Revenue Service (IRS) of the United States. FATCA has been widely adopted by countries around the world and is considered to be a significant tool for preventing tax evasion and financial crimes.
Country-by-Country Reporting (CbCR) was introduced by the OECD in 2015 to provide tax authorities with a global picture of the activities of multinational corporations. The CbCR framework requires multinational corporations to report information about their operations and financial performance in each country where they operate. This information includes data on revenues, profits, taxes paid, and other important financial metrics. The purpose of CbCR is to help tax authorities identify any potential tax avoidance strategies used by multinational corporations.
Mandatory Disclosure Rules (MDR) were introduced by the European Union in 2018 to enhance tax transparency and prevent tax avoidance. Under the MDR framework, companies are required to report information about their cross-border arrangements with other companies, such as tax optimisation strategies, transfer pricing arrangements and other financial transactions. The purpose of MDR is to give tax authorities a better understanding of the tax practices of companies operating in the EU and to prevent tax avoidance.
The implementation of XML reporting frameworks such as CRS, FATCA, CbCR and MDR has revolutionised the way in which tax authorities track and prevent tax avoidance, money laundering and other financial crimes. However, organisations are now faced with challenges in adopting the new XML submission format. XML Authority can assist organisations by seamlessly integrating XML reporting into your existing process allowing you to streamline tax reporting with no disruption to your existing systems. Book a demo with us to see how XML Authority can transform your tax reporting.
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- ESMA ESEF
- UK HMRC
- Irish Revenue
- Danish Business Authority
- and many others
- EBA CRD IV (COREP & FINREP)
- EIOPA Solvency II
- Single Resolution Board
- National Banking and Insurance