Thailand moves towards CRS compliance
By Paul Gambles, MBMG Group
On 26 January 2017, Thailand took a step towards compliance with the Common Reporting Standard, an international system for different tax authorities to exchange information. After several years of delay, the Kingdom joined the Global Forum on Transparency and Exchange of Information for Tax Purposes, becoming its 139th member.
The Forum is designed to open up the path to the automatic exchange of financial information. However, this is merely the first step towards implementing the CRS. Thailand would need to sign and implement a separate convention as well as put all the mechanisms into place before it could start to automatically exchange people’s information. Consequently, there is no set date as to when Thailand will be completely in the CRS club. One thing which is for sure though is that it will not be until 2018 at the earliest.
However, this does not mean that people with financial connections in Thailand can ignore the CRS in the hope that it will go away. The delay merely gives financial institutions and their clients time to prepare for the inevitable. The move is of significance to those with links to Thailand. Fellow ASEAN members Singapore, Malaysia and Indonesia have already committed to starting the information exchange in 2018. Additionally, the vast majority of European countries and territories, including Guernsey and the Isle of Man, are due to make the first exchange in 2017.
Once the CRS is implemented in the “Land of Smiles”, as Thailand is occasionally known, anyone resident in a signatory country who holds a Thai bank account will, by virtue of a series of a reciprocal bipartite agreements, have their account information automatically sent to their resident country’s tax authorities. Furthermore, the offshore account information of Thai residents would be automatically reported to Thailand’s Revenue Department.
The information to be exchanged is expected to include personal details (address, date of birth), tax identification number, account numbers and balance at the end of the relevant calendar year or date of closure (for investment plans this will also include withdrawals and additional investments).
Under the OECD’s auspices, the CRS will create a globally reciprocated AEOI (Automatic Exchange of Information) for financial accounts and structures, including bank accounts, investment accounts and even structures such as trusts. Along with FATCA (The Foreign Account Tax Compliance Act) introduced by US lawmakers in 2010 and UKCDOT (United Kingdom Crown Dependencies and Overseas Territories) regulations passed in 2014, this means that businesses and individuals may be subject to three different AEOI regimes.
The CRS is now at a halfway house. Some 55 countries have committed to a first exchange of information this year and 47 have committed to starting in 2018. There are significant gaps though. Some countries, like New Zealand, have committed to reporting next year but have not even passed the primary legislation through parliament yet. And then there is the case of the US, which has not agreed even in principle to join in with the CRS. America’s tax authorities would seemingly be quite happy to receive information through FATCA without reciprocating through the CRS.
Joining the forum is a logical step for the Thai government, having signed an intergovernmental agreement with the US to implement FATCA in March last year, some two-and-a-half years after having agreed a draft framework for negotiation. Implementation means that the bank accounts of any US national or resident with financial accounts in Thailand will be reported from this year onwards and also the financial information of Thai residents with accounts in the US will be provided to the Thai authorities.
Paul GamblesMBMG Group, Bangkok, Thailand
T: +66 2 665 2534 9
Paul Gambles is Co-founder and Managing Partner of the MBMG Group and Director of MBMG Investment Advisory. He has completed CFA Level 1 and he is licenced by the SEC as both a Securities Fundamental Investment Analyst and an Investment Planner. He is a member of Advisory Board of IDEA Economics.
MBMG Group was established in 1996 as a diversified professional services practice and employs almost 50 specialists in advisory services, accounting and audit services, insurance services, legal services, property solutions and estate planning for clients in Thailand, Singapore and throughout Asia.
Published: March 2017 l Photo: Colourbox.de - Galyna Andrushko
Advisory, Auditing & Accounting
Corporate Finance, Law Firm, Tax
T: +66 2 665 2534 9