In 2011, Georgia made a resolute move towards global financial transparency by embracing the Common Reporting Standard (CRS), an international framework developed by the Organization for Economic Co-operation and Development (OECD). This strategic decision not only solidifies Georgia's commitment to combating tax evasion but also holds implications for international customers with bank accounts in the country.
Understanding CRS: A Global Effort for Financial Integrity
The Common Reporting Standard (CRS) is an international initiative designed to facilitate the automatic exchange of financial account information between countries. Developed by the OECD, its core objective is to prevent tax evasion by ensuring that tax authorities worldwide have access to accurate and comprehensive information about the financial accounts of foreign residents. The automatic exchange of information occurs annually, promoting tax transparency and legal compliance on a global scale.
Legal Framework and Georgia's Pledge to International Standards
Georgia's commitment to CRS is rooted in the Convention of January 25, 1988, of the OECD and the Council of Europe. In 2022, Georgia took a significant step forward by signing the Multilateral Competent Authority Agreement (CRS MCAA), signaling its dedication to the implementation of CRS. To support this commitment, new articles 702 and 2792 were introduced into the Tax Code of Georgia, outlining the obligations of reporting financial institutions and the associated tax liabilities.
Navigating CRS Compliance in Georgia
For international customers holding bank accounts in Georgia, Article 702 of the Tax Code mandates that financial institutions collect and provide information on the tax residency of customers to the Revenue Service. The Revenue Service acts as the central authority overseeing CRS implementation, ensuring compliance with obligations and facilitating information exchange with other participating jurisdictions.
Financial institutions in Georgia are now obligated to determine the tax residency status of each international customer. If a customer is a tax resident of a foreign country, their information is shared with the Revenue Service. This legislation, effective since January 1, 2023, requires financial institutions to submit information annually from January 1, 2024, to June 30, ensuring timely compliance with CRS standards.
Implications for International Account Holders
International customers with bank accounts in Georgia should be aware that their information may be subject to automatic exchange under CRS. The Revenue Service, as the competent agency, plays a crucial role in obtaining, transferring, and monitoring compliance with CRS-mandated information exchange. It is advised that account holders familiarize themselves with these developments and ensure proper compliance with tax residency requirements.
Conclusion: Georgia's Commitment to International Financial Standards
Georgia's adoption of CRS reflects its commitment to international financial standards and signals a proactive approach towards global cooperation in combating tax evasion. International account holders in Georgia should stay informed about these regulatory changes and work with financial institutions to ensure seamless compliance with CRS, contributing to enhanced financial transparency on an international scale.