Japan tax agency begins exchange of information on accounts held by foreigners with home countries

TOKYO – The National Tax Agency (NTA) has started to regularly exchange information on accounts held by foreigners and foreign companies at Japanese financial institutions with the tax authorities in their home countries in order to prevent the tax evasion by hiding assets abroad.

The exchanges, with countries and regions that have signed tax treaties with Tokyo, are based on the Common Reporting Standard (CRS). Japan has shared information on interest, dividends and compensation under the standard, but this is the first time the country has exchanged bank details.

“The measure will ensure transparency of assets held abroad and prevent inheritance tax evasion,” said an official in the agency’s international operations division. “Promoting international cooperation in such efforts will make it difficult to conceal assets abroad. We hope that taxpayers will voluntarily report the assets they hold outside the country.”

As part of this system, the NTA had collected information on some 550,000 accounts held by citizens and foreign entities from 64 countries and regions mainly in Asia and Europe as of October 31. The agency had provided information on 90,000 accounts to 58 countries and regions by the end of October, according to the Directorate of International Operations.

People with 50 million yen or more in assets outside of Japan must report them to the NTA, and the agency compares those statements with information from tax authorities in other countries to verify hidden holdings. The agency also intends to use the information in its tax collection work and to assess the effectiveness of the system.

CRS was created by the Organization for Economic Co-operation and Development (OECD) in 2014 as a result of the use of tax havens by high net worth individuals and multinational corporations seeking to evade tax.

Countries using CRS-based systems should require domestic financial institutions to report to local tax administrations information on accounts held by foreigners and foreign companies, including names, addresses, countries of residence and account balances. accounts. The tax authorities of participating countries regularly send this information to the tax authorities of the home countries of account holders through the CRS systems on an annual basis.

As of October 5, 2018, 102 countries and regions have announced their participation in the system for exchanging information on bank accounts held by foreign individuals and companies. As of September this year, Japan can exchange information with 88 countries and regions that have met certain standards such as information security.

(Japanese original by Yoshihiro Sakai, City News Service)

Esther L. Steinbach

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