Tax Compliance is a standard requirement for regulated financial institutions.
In Switzerland, Tax Compliance is a subject in constant evolution, with several ongoing projects, notably the introduction of a predicate tax offense to money laundering (Art. 305bis CC) and Automatic Exchange of Information in Tax Matters (AEOI).
We now prepare for the new transparency requirements of EU: DAC6 that imposes mandatory disclosure rules for cross-border tax arrangements.
How (and to which extent) should the financial intermediary ‘know’ or ‘presume’ that the client is committing a criminal tax offense preliminary to money laundering? How to determine whether the funds in custody or under management are indeed originating from such an offence?This question must be addressed with realism, with an internal Compliance Tax Policy. To assist each Bank in resolving the legal risks connected with the tax offenses preliminary to money laundering, BRP Tax has developed the new Monitoring of Tax Risks (MTR). It provides, country by country, the key information needed by Compliance Officers to identify the risks of a business relation in tax matters. The OBA-FINMA confirmed that financial intermediaries are entitled to use the maximum tax rates of the residence country in defining the criteria for country risk.
The MTR 2019 now includes new information related to Tax Transparency Rules (CFC rules, CRS-AEOI, QI-FATCA, MDR-DAC 6), Evidences of Tax Compliance and Voluntary Disclosure Program.
This information, available in written (pdf) format or as computer-readable files, is updated at least once a year.
While is clear that Tax Compliance will follow the pattern of AML, it is not clear yet how it will be applied. Thanks to our product Monitoring of Tax Risks (MTR), BRP Tax proposes an assistance package completely customizable for your attention which includes:
BRP Tax provides QI/FATCA and CRS client documentation review with a recommendation for each reviewed client’s file.
The model Tax Compliance Policy defines the basic of tax compliance. Its risk-based approach is far more effective in detecting and solving tax non-compliance, and far more efficient, than brute-force (indiscriminate) scans of all customer files. It is also more sustainable in the long term, since it is designed to minimize interruptions of daily operations, disruptions for clients and administrative costs.
BRP Tax has been updating its model Tax Compliance Policy for Banks, as well as the corresponding client declarations, in order to align them with Art. 305bis and AEOI. The resulting approach of BRP Tax is effective (by meeting the regulatory requirements and protecting the bank), efficient (by creating minimal disruption to daily activity) and sustainable in the long term. At the same time, there is a strong demand from Legal and Tax Compliance departments in Swiss banks to benefit from a regulatory watch in those matters. Following all these evolutions can be both tedious and time consuming; even when that is done properly, the issue of how to implement them in the day-to- day activity of the bank needs to be addressed and solved.