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Client tax reporting a priority as CRS kicks in

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This is a sponsored article from BearingPoint.

Global moves to increase tax transparency, headlined by the OECD’s Common Reporting Standard regime and multiple tax amnesties, are stirring Asia’s private banking industry, which has no choice but to manage this regulatory flux across jurisdictions.

But while Asian high-net-worth individuals (HNWI) have no choice other than to deal head-on with complex tax issues concerning multiple tax residencies and myriad offshore investments, the banks they use are less aligned when it comes to their role. Some groan under the weight of the challenge, others prefer to remain hands-off, and still others are seizing the opportunity to provide 360-degree servicing to their clients.

In partnership with consulting and technology firm BearingPoint, Asian Private Banker recently hosted a closed-door roundtable featuring 10 senior leaders and COOs of regional private banks and wealth management firms to discuss the need to provide Asian HNW clients with a tax-reporting solution.

Ronald Frey, partner, BearingPoint

“Our clients are usually very complex. They can be individuals, trusts or partnerships,” one of the attendees from a Swiss private bank affirmed, underlining the problem.

The attendee pointed out that, in Asia, private banks currently create profiles based on how clients identify themselves from a tax-residency perspective, and that the production of customised client tax reports is often done on an ad hoc basis due to how “overwhelming” the process can be.

Meanwhile, some participants raised the point that their private banks avoid helping clients with their tax-reporting obligations altogether, warding off any perception that they are providing a tax advisory service. Instead, they will often refer clients to the likes of the Big Four accounting firms.

BearingPoint clarified that there is a “very big difference” between tax advisory services and simply providing clients with their tax information — information that banks already collect.

“In Europe, client tax reporting is in the market already; the solution, EasyTax, is presented as an information report, providing tax information needed for clients’ own tax reporting, without advisory elements,” explained Marco Kundert, senior manager for BearingPoint.

Marco Kundert, senior manager, BearingPoint

“Our solution can produce country-specific tax reports based on client information that private banks already have, this service can ease clients’ tax filing duties.”

“We have seen in Europe and South America the demand from HNWI which needs more sophisticated client reporting had significantly increased due to regulation changes and tax amnesties,” he added.

Some participants, whose banks already use the service in Europe, mentioned that providing clients with tax reports is not just a value-add — it’s an essential service.

“Who are we to turn clients away if they ask for our help?” a participant from a European-headquartered bank asked. “Our overall objective as private banks should be to improve and facilitate their lives.”

The group ended the roundtable with a forward-looking discussion on how client tax reporting could potentially enter Asian private banks’ suite of services as a mainstay offering.

A number of participants observed that Indonesia’s recent tax amnesty has already driven many affected clients to look to their banks for tax reports, so perhaps further amnesties will serve as an inflection point for the role of technology in assisting clients with their tax-reporting needs.

Learn more about BearingPoint and its client tax reporting solution, EasyTax, here.

This is a sponsored article from BearingPoint.

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