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February 20, 2018

OECD launches consultation on misuse of residence by investment schemes

The OECD has launched a consultation on the misuses of residence by investment (RBI) schemes for tax evasion/avoidance purposes.

The OECD said that more jurisdictions are offering RBI or citizenship by investment (CBI) schemes, which allow foreign individuals to obtain citizenship or temporary or permanent residence rights in exchange for local investments or a flat fee.

Legitimate reasons for individuals to partake in these schemes include greater mobility due to visa-free travel, better education and job opportunities for children, or political stability.

However, information released in the market place and obtained through the OECD's CRS public disclosure facility, highlights the misuse of RBI and CBI schemes to circumvent reporting under the Common Reporting Standard (CRS).

As part of its CRS loophole strategy, the OECD is releasing a consultation document that assesses how these schemes are used in an attempt to circumvent the CRS, identifies the types of schemes that present a high risk of abuse, reminds stakeholders of the importance of correctly applying relevant CRS due diligence procedures in order to help prevent such abuse, and explains next steps the OECD will undertake to further address the issue, assisted by public input.

Public input is sought both to obtain further evidence on the misuse of CBI/RBI schemes and on effective ways for preventing such abuse, responses must be sent by 19 March 2018 at the latest by e-mail to CRS.Consultation@oecd.org. 

 

By Joe Pickard

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