CRS Obligations of Reporting Singaporean Financial Institutions (“Reporting SGFIs”)
Reporting SGFIs are expected to take reference from the CRS Compliance Guidelines e-Tax Guide (PDF, 532KB) which describes IRAS’ guiding principles in relation to CRS Compliance and the 23 hallmarks or desired outcomes that you should achieve in order to effectively
fulfil your CRS reporting obligations.
As a Reporting SGFI, you are required to comply with the following obligations under the CRS Regulations:
| Obligations of RSGFIs | CRS Guidance and References |
|---|---|
| Register for CRS with IRAS |
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| Perform due diligence on all Financial Accounts that you maintain (e.g. Preexisting Accounts for individuals and entities, New Accounts for individuals and entities) |
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| Report all Reportable Accounts that you maintain or file a Nil Return (if you do not maintain any Reportable Accounts) to IRAS. |
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You may also refer to the IRAS CRS FAQs (PDF, 458KB) for more information.
What you need to do?
You should put in place a robust compliance approach as well as internal policies, procedures and systems that will ensure your effective compliance with the CRS in Singapore.
To assist you in complying with the CRS requirements in Singapore, IRAS has issued a
CRS Compliance Guidelines e-Tax Guide (PDF, 532KB).
The CRS Compliance Guidelines e-Tax Guide describes our guiding principles in relation to CRS Compliance and the 23 hallmarks or desired outcomes that you should achieve to demonstrate the sufficiency and robustness of your operating environment, how you fulfil your CRS due diligence obligations and the manner in which you fulfil your CRS reporting obligations.
IRAS recommends for Reporting SGFIs to conduct periodic review of their CRS Compliance environment and controls. You may conduct a self-assessment of your CRS Compliance using the self-review toolkit, found in Annex A of the CRS Compliance Guidelines e-Tax Guide (PDF, 532KB). The toolkit contains recommended internal controls that a Reporting SGFI may implement.
CRS Compliance Activities
IRAS takes a risk-based approach to ensure that Reporting SGFIs comply with their CRS obligations in Singapore. IRAS also seeks to minimise Reporting SGFIs’ compliance costs while ensuring their CRS compliance.
IRAS will conduct reviews and audits on Reporting SGFIs that pose a higher risk of non-compliance with the CRS. In assessing the risk of non-compliance by Reporting SGFIs, IRAS will consider, among others, a combination of factors such as:
- Business profile and activities of the Reporting SGFI;
- Track record in fulfilling its FATCA and CRS obligations;
- Track record in other relevant areas of tax and regulatory compliance; and
- Feedback received from Singapore’s CRS partners.
Depending on our assessment of how effectively the identified Reporting SGFI has fulfilled its CRS obligations in Singapore during such reviews, IRAS may issue recommendations for the Reporting SGFI to address gaps in its CRS compliance and undertake timely corrective actions.
IRAS will also approach entities which are not registered as Reporting SGFIs to verify their entity classification under the CRS.
Common CRS Errors and Issues
- Non-reporting of TINs and/or Date of Birth
Some Reporting SGFIs might mistake the “TIN” and “Date of Birth” fields as optional for preexisting accounts and did not report the TIN and/or Date of Birth in their CRS returns. However, Reporting SGFIs are required to report the “TIN” and “Date of Birth” so long as they possess records of the TIN or Date of Birth of the account holders or Controlling Persons. - Wrongful CRS entity classification of Entity Account Holders
We observed that some Reporting SGFIs did not perform reasonableness test on declared entity classifications provided in self-certification leading to incorrect classification of the account holders’ CRS entity classification. As a result, certain reportable accounts may have been omitted from CRS reporting arising from misclassifying entity account holders as Active Non-Financial Entities or Financial Institutions, when they should have been a Passive Non-Financial Entity. In the case where the RSGFI is unable to determine the status of the Account Holder as an Active NFE or a FI other than non-participating professionally managed investment entity, the RSGFI must presume that it is a Passive NFE and perform a look through to identify the Controlling Person(s). Should the Controlling Person be reportable, the RSGFI should report the Controlling Person of the Passive NFE as well. - Failure to identify and collect self-certification for controlling persons of entity account holders in the case of a trust that is a SGFI
Some trusts that are Reporting SGFIs only identify and collect self-certification from the controlling persons of Passive Non-Financial Entities (“NFEs”) account holders. In the case of a trust that is a Reporting SGFI, the CRS requires for the trust to identity and collect self-certification from the controlling persons of all entity account holders, including FIs and Active NFEs. Trusts which are SGFIs should put in place procedures and controls to ensure the identification and collection of self-certification from controlling persons of all entity account holders.
Please refer to D.7 of the IRAS FAQs on the CRS (PDF, 458KB) for more information. - Not complying with the Change-in-Circumstances (CIC) follow-up procedures and reporting of relevant jurisdiction
Some Reporting SGFIs might overlook to report the original jurisdiction associated with the account if the CIC does not positively affirm that the original jurisdiction is no longer relevant (i.e. not cured). In such cases, Reporting SGFIs are required to treat the Account Holder as a resident for tax purposes for each of the Jurisdictions for which an indicium is identified instead. Reporting SGFIs should put in place mechanisms to monitor the status of CICs and ensure that all relevant jurisdictions are reported for CICs which are not cured. - Reporting errors arising from human errors
Some Reporting SGFIs might omit some accounts or CRS information due to human errors (e.g. consolidation errors, oversight). Failure to report all Reportable Accounts is an offence under Section 105M of the Income Tax Act. Reporting SGFIs are encouraged to put in place reconciliation checks at the point of data extraction as well as prior CRS reporting to ensure complete and accurate reporting. - Reporting of TIN equivalents
Under the CRS, Reporting SGFIs are required to report TIN information of their account holders, including TIN equivalents, where such information is available. Please refer to the IRAS CRS TIN Guide in reviewing TIN information of the Reporting SGFIs’ account holders. - Reporting of account balance for settlors and protectors in the case of a trust
Some Reporting SGFIs attributed a 'nil' value for reporting of account balances for settlors of irrevocable trusts on the basis that the settlor do not receive benefits from the trust property. In such cases, Reporting SGFIs should report the total value of all trust property. This reporting treatment applies to both settlors and protectors.
Penalties for Errors and Non-Compliance
Failure to comply with the CRS obligations is an offence under Section 105M of the Income Tax Act.
IRAS will work with and assist Reporting SGFIs that are voluntarily compliant to ensure their compliance with CRS in Singapore. On the other hand, IRAS will not hesitate to take deterrent measures such as issuing warnings and imposing penalties on errant Reporting SGFIs that choose to be non-compliant.
| Offences | Penalties |
|---|---|
| If found guilty under Section 105M(1) of the Income Tax Act:
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| If found guilty under Section 105M(1B) of the Income Tax Act:
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Provision to IRAS any document which contains any information or any information known to be false or misleading | If found guilty under Section 105M(3) of the Income Tax Act:
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| Enters into an arrangement or takes an action in order to circumvent any obligations under the CRS | IRAS may disregard the arrangement or action under Section 105MA of the Income Tax Act. Thereafter, appropriate CRS obligation shall then apply accordingly. |
Voluntary Disclosure of Errors
IRAS believes that majority of Reporting SGFIs are voluntarily compliant. IRAS understands that some Reporting SGFIs may occasionally make errors in their CRS returns due to negligence or lack of understanding of their CRS obligations.
IRAS encourages Reporting SGFIs that have made errors in their CRS returns to come forward voluntarily as soon as they have uncovered the error to disclose these errors or omissions and get their CRS obligations right.
For voluntary disclosure of error(s) relating to CRS returns, you may provide information to IRAS.
Reporting of CRS Non-compliance
If you are aware of any potential CRS non-compliance, including the use of abusive schemes to circumvent reporting under the CRS or intentional provision of false information to IRAS relating to the CRS, you may provide information to IRAS.
Your information could help make the system fairer for all of us. Your identity and all information / documents provided by you will be kept confidential.
Useful Information You Can Provide Us
IRAS will review the information that you have provided and will initiate investigation if our review indicates that an offence has likely been committed.
To assist us in our review, please provide the following:
- Particulars of the Reporting SGFI or Individual which was purportedly non-compliant (e.g. Full name, tax reference number, address, contact number, identities of parties involved in the scheme, product and/or structure);
- Description of the potential CRS non-compliance incident, including the features of the scheme that may be used to circumvent reporting under the CRS where applicable;
- Explain how and when you became aware of the non-compliance incident;
- The Reporting Year(s) involved as well as how active or extensive is the scheme, product and/or structure being promoted or used where applicable; and
- Supporting information or documentary evidence currently in your possession indicating non-compliance with the CRS, if any (e.g. details of relevant account holders, self-certifications, email correspondences, marketing materials). For records that are not in your possession, please describe them and identify their location(s) where possible
What IRAS would do with your information?
IRAS takes every report of non-compliance seriously and will make an independent evaluation of the case using the information provided as well as other information available to us. Where IRAS decide that an investigation is warranted, IRAS will follow up accordingly.
Please note that IRAS is bound by strict secrecy provisions. Thus, IRAS will not be able to update you on how IRAS deal with the information provided including; whether IRAS have decided to commence investigation and the status or outcome of the case in the event that IRAS have investigated the case.
IRAS will not handle frivolous reports, e.g. personal or internal disputes among business partners, commercial disputes between private parties.