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. Pursuant to such Agreement, the financial institutions shall provide the governmental authorities in their countries with information about profits, balances and revenues generated from the sale of assets when the beneficiaries are resident outside their home country in accordance with the Common Reporting Standard developed by OECD.
The Agreement governs the criteria and rules for exchange of information and each party’s rights and obligations.
The key objective of the Agreement is to combat tax evasion worldwide and improve the international tax compliance.
Common Reporting Standard (“CRS”) describes the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as due diligence procedures to be followed by financial institutions to identify the reportable financial accounts.
The implementation of CRS requires a legal framework, technical capabilities and processes in place to guarantee confidentiality of information to be exchanged.
The Standard comprises four key parts:
- A model Competent Authority Agreement (CAA), providing the international legal framework for the automatic exchange of CRS information;
- The Common Reporting Standard;
- The Commentaries on the CAA and the CRS; and
- The CRS XML Schema User Guide
To further the cause of CRS in Kuwait, the Ministry of Finance (MoF) Kuwait issued the Ministerial Resolution no. 36 of 2017, namely “Concerning Guidelines For Implementation Of Requirements Of International Agreements For Exchange Of Tax Information”. In the resolution, through relevant clauses, the MoF advises all reportable Kuwaiti financial institutions to collect the information in accordance with the clauses stated in the CRS and its interpretations, in preparation for submission thereof to Tax Department in MoF.
Subsequently, the MoF Kuwait has issued the Resolution No. (46) Of 2017, namely “Additional Preliminary Guidelines concerning Implementation of the International Agreements on Tax Information Exchange.” In it, the MoF has stipulated that Kuwait is expected to exchange financial information for the financial year ended 31 December 2017 to be reported by 31 May 2018. One of the other important instructions contained in the resolution is that reportable financial institutions should submit three types of assurance certificates obtained from audit firms approved by the MoF to provide FATCA certifications.
The Financial information expected to be provided to the MoF and to be subsequently exchanged by the MoF with the OECD include the following:
- In case of individuals, the name, address, TIN(s) and date and place of birth of each Reportable Person and in the case of Entities the name, address, and TIN(s) of the Entity;
- the account number (or functional equivalent in the absence of an account number);
- the name and identifying number (if any) of the Reporting Financial Institution;
- the account balance or value as 31 December 2017 including accounts closed during the year 2017
Services provided by Baker Tilly
CRS Consulting Services
- Preparing a CRS GAP analysis report
- Developing CRS policy and procedures
- Providing ICT consulting services for CRS data classification and data security
- Training courses and workshops
CRS Assurance Services
The Ministry of Finance (MoF) Kuwait has issued the Resolution No. (46) Of 2017 on the Additional Preliminary Guidelines concerning Implementation of the International Agreements on Tax Information Exchange. On this regard, Baker Tilly provides the following attestation services:
- CRS Classification Attestation
(Reference: Ministerial Resolution No. 46 of 2017 concerning the preliminary guidelines to implementing of the International Agreements on Tax Information Exchange, Article 3, Clause 1)
- CRS Reporting Procedures Attestation
(Reference: Ministerial Resolution No. 46 of 2017 concerning the preliminary guidelines to implementing of the International Agreements on Tax Information Exchange, Article 3, Clause 2)
- Issuance of Annual/ On Demand CRS Compliance Certification for financial institutions about the extent of compliance with CRS requirements and integrity of processes and procedures in place
(Reference: Ministerial Resolution No. 46 of 2017 concerning the preliminary guidelines to implementing of the International Agreements on Tax Information Exchange, Article 3, Clause 3)
- CRS Classification Attestation
Added value to business entities from CRS Assurance/Consulting Services
- Comply with laws, regulations, resolutions and instructions issued by the regulators;
- Enhance business entity’s reputation and promote all stakeholders’ confidence; and
- Contribute to optimizing efficiency and reputation of the banking and financial services sector, and adherence to international legislations