An obligation for many financial dealers
As a signatory to international agreements to fight tax evasion, Vanuatu requires all its Financial Institutions to use the Common Reporting Standard (CRS) developed by the Organisation for Economic Co-operation and Development (OECD) for the automatic exchange of financial account information. The Vanuatu Competent Authority (VCA) then shares that information with 50+ jurisdictions around the globe.
The CRS applies to any Financial Institution which is a resident in Vanuatu. International companies holding a Financial Dealer License may be defined as an investment entity or a custodial entity resident in Vanuatu, thus as a Financial Institution subject to the CRS.
If you are a licensed Vanuatu financial dealer and are not sure if you must report, please contact your Vanuatu Registered Agent. If you wish to be exempted you should discuss it with a trusted legal advisor (in any OECD member country).
The accounts to be reported are those held for individuals or entities that are residents under the tax law of any foreign jurisdiction that participates in the CRS. Some accounts are excluded (retirement and pension accounts, certain escrow accounts, term life insurance contracts, and accounts held solely by a deceased estate).
Even if no account is identified as to be reported, you must file a NIL report providing that you maintain no reportable accounts in respect of the reporting period.
Financial dealers are free to appoint a third-party such as their Registered Agent to carry out their CRS obligations. However they remain responsible for any failure to meet the requirements.
All records related to CRS compliance must be kept for a period of 5 years.
To facilitate the process for the automatic exchange of financial information with other countries, the VCA has developed an online portal called the Multi Data Exchange Solution (MDES). It allows all CRS reporting entities to upload, validate and submit files quickly and easily, to revise any submitted data, and to receive notifications on the processing or content of their data.
The MDES includes extensive validation procedures to ensure all information is consistent and properly formatted using specific XML guidelines. Once all reporting is completed, the MDES connects to the OECD’s Common Transmission System (CTS) to share the information with the world.
As a financial dealer, the first step is to register for a Tax Identification Number (TIN). Your Registered Agent can help you complete the application. You must also notify the VCA that you have an obligation to report, using the email address VCA (at) vanuatu (dot) vu. Then, use your TIN to register to the MDES.
When submitting a report to the MDES, you can either upload XML files or input the information manually. Please contact your Registered Agent for guidance on how to produce the XML files.
Reporting schedule for 2021
Reporting is to be completed on an annual basis. The MDES portal currently offers the options to report for 2017, 2018, 2019 and 2020. You MUST submit a report for EACH of these years. Even if your company did not exist before 2019 or wasn’t active then, the VCA still request that you submit a NIL report for these years.
For 2021 the MDES will follow this schedule:
|January 2021||Corrections on reports from previous years|
|Feb-March 2021||New registrations for reporting entities|
|March 2021||Relation management and XML validations|
|Apr-July 2021||CRS reporting for 2020 and previous fiscal years|
|July 31, 2021||Final deadline for reporting|
What type of information is shared?
The information to be shared on each reportable account includes the name, address, TIN, date and place of birth of every reportable person (holders and/or ultimate beneficial owners), the ending year account balance and any gross interest paid during the reporting year to the account.
Reportable accounts include both new accounts (i.e. held from July 1, 2017) and older accounts (i.e. accounts that existed before June 30, 2017) that are held by residents of a foreign jurisdiction that has signed CRS agreements.
Beware of penalties
Failure to maintain records, to undertake due diligence or other CRS measures, and any false or misleading statement are liable to a fine not exceeding VT 1,000,000 or imprisonment for a term not exceeding 1 year. However, the current aim of the tax regulator is to encourage voluntary compliance with the law and to use penalties and prosecutions as a last resort.