The Mauritius Revenue Authority (MRA) recently issued two communiques regarding Common Reporting Standard (CRS) reporting errors and FATCA missing tax identification number (TIN) codes. As a reminder, CRS and FATCA reporting is due July 31, 2021.
CRS Common Errors
The MRA identified five common CRS reporting errors and reminded Financial Institutions (FIs) they may face penalties if they submit inaccurate CRS reports:
Wrong Interpretation of Undocumented Accounts
An account should not be reported as “undocumented” because of an incomplete or unavailable self-certification form. “Undocumented” has a specific meaning under CRS and the label should only be used when the criteria are met.
Reporting Entities As Controlling Persons
Do not report an entity as the Controlling Person of a Passive Nonfinancial Entity (NFE). Only a natural person can be a Controlling Person.
Mismatch Between Country of Residence and Country Codes
Make sure the account holder residence matches the country code entered in the CRS reporting. The MRA gave the example of Azerbaijan (AZ) being reported instead of South Africa (ZA).
Wrong Entity Classification
Consistent with the recent warning by the Cayman Islands, the MRA warned entities to ensure they are correctly classified. The MRA stated it has identified several cases of incorrect entity classification where, for example, Passive NFEs have been classified as FIs or Active NFEs.
Incorrect Reporting for Joint Accounts
There are specific rules regarding joint accounts whereby each account holder is attributed the entire balance or value of the joint account and the entire amounts paid or credited to the joint account. Reporting must be done as individual accounts not as a one joint account report.
FATCA Missing TIN Codes
Mauritius provided the link to the U.S. Internal Revenue Service (IRS) site where the IRS outlines its new optional tax identification number (TIN) codes which can be used in the FATCA XML Schema for reporting Y2020 data.
222222222 – Preexisting individual account with only U.S. indicia being a U.S. place of birth.
333333333 – New individual account that (1) has indicia of a U.S. place of birth, and (2) either:
(a) has a change in circumstances causing the self-certification originally obtained at account opening to be incorrect or unreliable, and a new self-certification has not been obtained, or
(b) was below the threshold for documenting and reporting the account at the time of account opening and subsequently exceeded the threshold, and a self-certification has not been obtained.
444444444 – Preexisting individual and entity account that (1) has U.S, indicia other than a U.S. place of birth, and (2) either:
(a) has a change in circumstances, causing the self-certification or other documentation originally obtained to be incorrect or unreliable, and a new self-certification or other documentation has not been obtained, or
(b) was below the threshold for documenting and reporting the account at the time of account opening and subsequently exceeded the threshold, and a self-certification or other documentation has not been obtained.
555555555 – New individual and entity account that has a U.S, indicia other than a U.S. place of birth, and (2) either:
(a) has a change in circumstances causing the self-certification or other documentation originally obtained to be incorrect or unreliable, and a new self-certification or other documentation has not been obtained, or
(b) was below the threshold for documenting and reporting the account at the time of account opening and subsequently exceeded the threshold, and a self-certification or other documentation has not been obtained.
666666666 – Preexisting entity account with account balance exceeding $1,000,000 held by a passive NFFE with respect to which no self-certifications have been obtained, and no U.S. indicia has been identified in relation to its controlling persons.
777777777 – For pre-existing accounts where there is no TIN available and the account has been dormant or inactive, but remains above the reporting threshold, also known as a “dormant account”. For reference, the U.S. defines “dormant account” in U.S. Treasury Regulations §1.1471-4(d)(6)(ii).
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