Due to the effects of the COVID-19 pandemic, the Mexican tax authority SAT extended the registration deadlines for FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard) for the 2019 reporting period from August 15, 2020 to December 7, 2020. The new Deadline also applies to:
- the filing of null reports
- third party filing
- the tax ID registration of reporting financial institutions
What are FATCA and CRS?
There are increasing legal obligations for financial institutions to ensure an automatic cross-border exchange of information for tax purposes. This includes the processing of account data, their storage and transmission to the national tax authorities, which in turn forward them to their foreign counterparts. FATCA (Foreign Account Tax Compliance Act) is a US-American law, which forms the “blueprint” for corresponding bilateral agreements on reporting obligations. The CRS (Common Reporting Standards) are the global counterpart. CRS is more comprehensive than FATCA in that reporting obligations are not only dependent on nationality, but also on indecency. Mexico has committed to implementing the corresponding OECD standard since 2017.
What is the OECD CRS Standard?
The Common Reporting Standard (CRS) was developed in response to the G20 request and approved by the OECD Council on July 15, 2014. It encourages jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions annually. This lists the financial account information to be exchanged, the financial institutions to be reported, the different types of accounts and taxpayers, and the general due diligence that financial institutions must comply with.
The standard consists of the following four main parts:
- Model Agreement on the Competent Authority (CAA) that provides the international legal framework for the automatic exchange of CRS information
- Common Reporting Standard
- Comments on the CAA and the CRS
- The CRS XML Schema User Guide
These regulatory changes could affect your business with view to customizing or support of your ERP/SAP system. Please contact us to learn about possible necessary reactions to the changes – we are happy to assist you!