China sets rules for due diligence on non-resident financial accounts

The China State Administration of Taxation publicised detailed "management approaches" for financial institutions to engage due diligence processes on non-resident accounts in an effort to against cross-border money laundering and tax evasion.

 

 

Starting July 1, 2017. Chinese financial institutions will carry out due diligence on deposit accounts, escrow accounts, stock or bond right interests of institutional investors.

 

The information will be collected for exchange with tax authorities of other countries to detect tax evasion practices using offshore accounts.

In 2014, the Organization for Economic Cooperation and Development (OECD) developed the Common Reporting Standard (CRS) for Automatic Exchange of Financial Account Information in Tax Matters and the standard was later endorsed by the G20.

 

Account

Description

Due diligence

Time

Individual

New account

After 2017.7.1

File+

Rationality verification

Start from 2017.7.1

Stock

Low net-worth

Account balance is less than $ one million before 2017.6.30

Existing file verification(e-copy)

Start from 2018.12.31

High net-worth

Account balance is more than $ one million before 2017.6.30

Existing file verification(e-copy+  hard copy+ Manager approval

Start from 2017.12.31

Institution

New account

After 2017.7.1

File+

Rationality verification

Start from 2017.7.1

Stock

Small amount

Account balance is less than $ 250 thousand before 2017.6.30

None

None

Others

Account balance is more than $ 250 thousand before 2017.6.30

File verification

Finish on 2018.12.31

 

 

 

Currently, more than 100 countries, including China, have signed up to implement the standard.

50 countries (regions) for exchange of information in 2017

Anguilla, Argentina, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, South Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, Turks and Caicos Islands, the United Kingdom.

50 countries (regions) for exchange of information in 2018

Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Bahamas, Bahrain, Barbados, Belize, Brazil, Brunei Darussalam, Canada, Chile, China, Cook Islands, Costa Rica, Curacao, Dominica, Ghana, Grenada, Hong Kong, Indonesia, Israel, Japan, Kuwait, Lebanon, Marshall Islands, Macau, Malaysia, Mauritius, Monaco, Nauru, New Zealand, Niue, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, Saint Martin, Switzerland, Trinidad and Tobago, Turkey, the United Arab Emirates, Uruguay, Vanuatu




 




 

 

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