CRS SOLUTIONS

How Does CRS Impact Your International Business?


The Common Reporting Standard (CRS) is designed to combat tax evasion by facilitating global exchange of financial account data. This standard sets out the criteria which determines the financial information of accounts that needs to be reported. Once an account is considered reportable, Financial Institutions are required to report to the competent authority in its country.

Financial Institutions broadly include banks, trust companies, custodial institutions, funds and fund managers, and insurance companies provide financial account data to the relevant country competent tax authorities to obtain a clearer understanding of financial assets held abroad by their residents for tax purposes.

Information such as name, nationality, address, date of birth, account numbers, interests, dividends, account balances, proceeds from sales and so on; will need to be reported. Foreign accounts and structures (such as companies, trusts) owned by tax resident individuals may no longer be confidential and private.

Currently, over 200 jurisdictions committed to implement CRS and has already initiated the legislation process for the exchange of tax and financial related information with other global institutions to improve its tax and financial transparency. This will bring great impact to jurisdictions which offer ZERO Tax as it often lack infrastructures to assist the businesses in creating real commercial substance.

Corporate Bank Accounts opened in far away jurisdictions from the registered place may attract closure by the bankers to meet their CRS and internal compliance policies. Tax Department also will not issue Corporate Tax Certificates and Personal Tax Certificates should the substance criteria is not fulfilled.

Commercial substances may not be easily created in every jurisdiction due to three (3) major concerns:

  • Too far a distance to travel for meetings and manage operations in jurisdictions like Malta, Seychelles, BVI, and Cayman
  • Operations set-up cost is too expensive for jurisdictions like Singapore, Hong Kong and Mauritius
  • Time difference is an added stress on top of day-to-day operational matters
 

6 Key Commercial Substances for Tax Proofing Your Set-Up!


  • Payment of Taxes
  • Key Management Decisions
  • Annual Compliance is in Order
  • Permanent Office
  • Local Employment
  • Bank Account in That Particular Jurisdiction

CRS Solutions for A Labuan Offshore Company


In the current CRS era, creating real commercial substance for your businesses will be the new norm for tax proofing purposes. Labuan “mid-shore” jurisdiction is a perfect place for Asia cross border businesses offering lower operational cost, a strategic location with complete infrastructures ready to create and evidence a real business with commercial substance in Labuan and within Malaysia.

So, how much does it cost to set up your commercial substance in Labuan?

Office Rental (80 – 400 sqft) USD 100 – USD 300
Junior Staff Basic Salary USD 300
Experienced Staff Basic Salary USD 600
Telephone and Electricity USD 50 – USD 100
Return Flight Tickets (Kuala Lumpur – Labuan) USD 80 – USD 120