On February 19, 2018 the OCED released a consultation document titled: “Preventing abuse of residence by investment schemes to circumvent the CRS”. According to the OECD more and more jurisdictions are offering “residence by investment” (RBI) or “citizenship by investment” (CBI) schemes. These are schemes that allow foreign individuals to obtain citizenship or temporary or permanent residence rights in exchange for local investments or against a flat fee. Individuals may be interested in these schemes for a number of legitimate reasons, including greater mobility thanks to visa-free travel, better education and job opportunities for children, or the right to live in a country with political stability. At the same time, they can also offer a backdoor to money-launderers and taxevaders. In this regard, information released in the market place and obtained through the OECD’s CRS public disclosure facility, highlights the abuse of RBI and CBI schemes to circumvent reporting under the Common Reporting Standard (CRS).

 

The OECD is looking into this matter as part of its CRS loophole strategy. The consultation document:

(1)  assesses how these schemes can be exploited in an attempt to circumvent the CRS;

(2)  identifies the types of schemes that present a high risk of abuse;

(3)  reminds stakeholders of the importance of correctly applying relevant CRS due diligence procedures in order to help prevent such abuse; and

(4)  explains next steps the OECD will undertake to further address the issue, assisted by public input.

 

The OECD seeks input is both to obtain further evidence on the misuse of CBI/RBI schemes and on effective ways for preventing such abuse. According to the OECD such input will be taken into account in determining the next steps that will be taken. Interested parties are invited to send their comments on this consultation draft by March 19, 2018 at the latest by email to This email address is being protected from spambots. You need JavaScript enabled to view it. in Word format (in order to facilitate their distribution to government officials). They should be addressed to the International Co-operation and Tax Administration Division, OECD/CTPA. Comments in excess of ten pages should attach an executive summary limited to two pages

 

In the consultation document a.o. the following subjects are discussed:

·   How CBI and RBI schemes can be exploited to circumvent the CRS

·   High risk RBI/CBI schemes

·   Importance of correctly applying existing CRS due diligence procedures

·   Possible additional measures to combat the abuse of CBI/RBI schemes

 

Click here to be forwarded to the consultation document titled: “Preventing abuse of residence by investment schemes to circumvent the CRS” as released on February 19, 2018 by the OECD.

 

 

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