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Three considerations for your next generation tax compliance platform
Don’t get caught out and be ready when the curtains go up
By Christopher Schaub, Solution Manager, Risk & Financial Crimes at SAS Australia & New Zealand
It seems like just yesterday that financial institutions were scrambling around trying to meet FATCA! Well, surprise, surprise the global version has now taken centre stage and the deadline is fast approaching. CRS (Common Reporting Standard), aka “GATCA”, shares similarities to FATCA but as you can imagine the scale is far greater with increased volume and complexity.
CRS is truly global, extending to any customer who is a tax resident in a reportable country. For FATCA it was all about identifying and reporting US persons only for tax purposes. Amazingly over 100 countries have now joined the program committing to sharing information from 1 July 2017 forward. And if this looming deadline isn’t scary enough, CRS has far reaching requirements covering many more entities, more customers, more accounts and many more rules.
Don’t view this as just another “tick in the box” exercise. Tackling this with a manual process or even cobbling together a semi-automated system, as many have done for FATCA, just won’t cut it. While it may seem like another situation to throw valuable resources, time and money at meeting a new compliance, I also see this as a real opportunity. It warrants serious consideration to take advantage of this global initiative and be smart in your strategy:
Don’t view this as just another “tick in the box” exercise. Tackling this with a manual process or even cobbling together a semi-automated system, as many have done for FATCA, just won’t cut it.
Automate. Ensure a risk-based approach by leveraging KYC (Know Your Customer) and CDD (Customer Due Diligence) technology. Keeping a close eye on your customers, spotting where they breach the rules (called ‘indicia’) and quickly resolving any exceptions are critical. Why reinvent the wheel when this technology is available.
Combine. Don’t treat CRS separately to FATCA. Design your CRS platform with FATCA in mind, drawing parallels between them - data, rules, processes and reports. And don’t forget to include all the skilled resources that have helped shape your FATCA solution as they will be key to design, deploy and maintain your next generation tax compliance platform.
Be flexible. Adapting quickly to change will lead to success. It was acceptable to design and deploy a static approach for FATCA as it is more simplistic in nature compared to CRS. However CRS is a bigger undertaking and the impact it will have is not yet fully understood. Rules are continually being tweaked as new countries join the program. Not being in a position to swiftly adapt to these changes will be frustrating and costly.
Getting CRS ready is a daunting task, especially as the size and impact is not yet fully known apart from what FATCA has taught us since going live in 2010.
You can be smart though! By considering a few ground rules you can achieve a common automated tax compliance platform that is both cost-effective and drive operational efficiencies. Foremost it will give you and your stakeholders peace of mind.
So, when the curtains go up on 1 July 2017 woo the crowd with a solid approach to CRS and be ready for an encore as you quickly adapt to any new expectations thrown at you as the show goes on. Is your organisation ready for CRS opening night?