The OECD is counting on the public in identifying schemes
targeted to circumvent the Common Reporting Standard (CRS). The public is
invited to report any such schemes to the OECD through the Automatic Exchange
Portal. The Schemes and avoidance products include pension schemes and
insurance products established to avoid CRS reporting, as well as residence-
and citizen-by-investment programs.
HK retirement schemes under ORSO and citizenship-by-investment targeted by
OECD
Hong Kong’s Occupational Retirement Schemes (ORS) are one of
the first products to be named and shamed as avoidance schemes and prompted the
Inland Revenue Department (IRD) to issue a clarification and highlight that the
anti-avoidance provisions of the Inland Revenue Ordinance (IRO) take effect on
abusive arrangements.
Those who jumped the gun setting up an ORS in the hopes to
dodge CRS reporting are now not only stuck with a likely expensive structure
that won’t have the desired effect, but, depending on the structure itself, the
ORS may be a reporting financial institution in itself. ORS are commonly
structured as trusts and, with the removal of the exclusion as a pension scheme
under anti-avoidance provisions, could fall within the scope of an investment
entity, and thus a reporting financial institution, or the trustee could be a
reporting financial institution.
Other avoidance schemes that are targeted by the OECD are economic citizenship and residence programs through which the nationality or a residence permission is obtained by an investment.