After FATCA comes GATCA
By Rodolfo Sánchez-Arellano, New Corporate Approach, S.C.
In February of this year, the OECD released the Standard for Automatic Exchange of Financial Account Information, which is starting to be known as GATCA as its goals are similar to the FATCA legislation which was recently implemented in the USA. The OECD recently announced that 47 countries declared an automatic exchange of information between their jurisdictions on 6 May 2014.
Under GATCA, jurisdictions will obtain information from their financial institutions (FI) and will automatically exchange it with other jurisdictions on an annual basis. GATCA contains the text of the Model Competent Authority Agreement (CAA) and the Common Reporting and Due Diligence Standards (CRS).
GATCA sets out the financial account information to be exchanged, the FIs that need to report, the different types of accounts and the taxpayers that are covered.
To prevent taxpayers from circumventing the CRS, it is specifically designed with a broad scope, including the reportable accounts, which also account balances and sales proceeds from financial assets. The FIs that are required to report under the CRS are not limited to banks and custodians. The reportable accounts include accounts held by individuals and entities (which includes trusts and foundations). It includes a requirement to look through passive entities to report on the individuals that ultimately control these entities and describes the due diligence procedures that must be followed by FIs to identify reportable accounts.
GATCA will play an important role in helping the world move toward greater financial transparency, despite the expense involved in this process and the reluctance emerging from some sectors.
Rodolfo Sánchez Arellano
New Corporate Approach, S.C., Mexico City, Mexico
T: +52 55 8421 9359
Rodolfo Sánchez Arellano is tax partner at New Corporate Approach, S.C., a firm located in Mexico City. He has more than 20 years of experience advising clients in corporate taxation, international taxation, cross border transactions and real estate and infrastructure matters.
published: June 2014