Nigeria’s Common Reporting Standards – 6 Crucial Things Your Financial Institution Should know (Part 2)

  1. What Information is required under the CRS

Reporting Financial Institution (RFI) – Simply put, these are institutions located in participating jurisdictions that is not a Non-Reporting Financial Institution. As mentioned earlier they are depository institutions, custodial institutions, investment entities and specified insurance companies

Non-Reporting Financial Institution means a financial institution that is excluded from reporting and includes government entity, participation retirement fund, other low risk entity, an exempt collective investment vehicle and a Trust to the extent that the trustee is a RFI and reports all information required with respect to Reportable accounts of the Trust. A RFI is required to gather and share with the Federal Inland Revenue Service (FIRS) information about financial accounts held by individuals and corporate entities that are tax resident in a Common Reporting Standard (CRS) participating jurisdiction. The FIRS would in turn share this information with the participating jurisdiction in which the account holder is tax resident, the details include;

  • The name of the Reportable Person (Account holder)
  • Address
  • Jurisdiction of Tax residence
  • Date and place of birth
  • Account number
  • Tax identification number
  • Income (including interest, dividends and other income) earned;
  • Account balance as at the reporting period.
  • Name and Identification number of Financial Institution keeping the account
  • For Depository Account – Specific information required is the total amount of interest paid or credited to the account during the reporting period
  • Custodial Account – total gross proceeds from sale of financial assets or redemption credited to the account during the period and total gross interest, investment and dividend credited to the account during the reporting period

    2. How do you know which Financial Accounts to Report?

The RFI performs a due diligence on the Financial Accounts held by reportable persons to know if such account is a Reportable Account. Once the Account has been identified as a reportable account the details listed above would then be gathered and submitted to the (FIRS) whilst documentary evidence is stored with the RFI.

3. What if as an RFI, I do not have any Reportable Accounts?

According to the CRS regulations, an RFI with no identified Reportable Account would still be required to file what we call a “nil” return. This would serve as an information return to the FIRS stating that, the RFI does not maintain any Reportable Account in respect of that year.

4. Does CRS apply to all countries?

No, CRS applies to only the participating jurisdiction, i.e. countries that have agreed to the automatic exchange of financial information in tax matters and are published on the list. Information would only be gathered and shared among these participating jurisdictions, for example, details about United States Tax residents would not be reported/shared under the CRS but rather under the Foreign Account Tax Compliance Act (FATCA) which is a US law requiring due diligence and disclosures similar to those required under the CRS.

5.    What is the Summary of CRS process?  

Reporting Financial Institutions would review their Financial Accounts to identify Reportable Accounts by applying Due Diligence Rules and then Report the Relevant Information.

      6      In the event that you or your financial institution require assistance with Filing Information Returns and compliance with CRS Regulation, Taxaide’s Professional Personnel can assist in ensuring that all the steps required to comply under the Regulation are duly performed. Taxaide’s technology flagship, Taxaide Technologies Limited (Taxtech) are also able to deploy easy to use technology for the automation of your CRS compliance process.