Common Reporting Standards (“CRS”)
The Common Reporting Standards (“CRS”) is a global Standard for Automatic Exchange of Information (AEOI) of financial accounts.
- It requires the Financial Institutions (FI) in the CRS Participating Jurisdictions to identify those financial account holders who are tax residents of other CRS Reporting Jurisdictions.
- Then on annual basis these FI’s are required to report certain personal and financial information (dividends, interest, sales proceeds) of those CRS reportable accounts to the AEOI CRS portal of the Ministry of Finance, who will then automatically exchange the information to those tax authorities of Reportable Jurisdictions where the reportable account holders are tax resident.
- It includes accounts held by individuals and entities, including trusts and foundations. If the account holder is an entity, classified as a so-called Passive Non-Financial Entity, then the FI’s also need to report their Controlling Persons who are tax resident of a CRS Reporting Jurisdiction.
CRS has been rolled out globally by more than 100 jurisdictions who have to activate exchange relationships under the Multilateral or Bilateral Competent Authority Agreement (CAA).
On 19 August 2016, the Government of the State of Kuwait signed the CRS Multilateral Competent Authority Agreement with the Organization for Economic Cooperation and Development (“OECD”) for exchange of information for tax purposes.
Subsequently, the Ministry of Finance, Kuwait has issued the Resolution No. (46) Of 2017, namely “Additional Preliminary Guidelines concerning Implementation of the International Agreements on Tax Information Exchange.”
Financial Institutions subject to CRS in Kuwait are required, under the Ministerial Resolution No. (46) of 2017, to appoint an accredited audit firm other than their external auditor to carry out the required review procedures.
The audit firm is required to carry out the required review procedures and issue the following reports:
- Report on the CRS classification of the financial institution.
- Report on the CRS reporting procedures of the financial institution.
- Report on the CRS compliance of the financial institution.
The above reports have to be submitted by the financial institution to the Ministry of Finance on or before 31 May of each year with respect to the previous year’s CRS reporting.