15 Jun

How to deal with increasing tax authority scrutiny

The aim of the conference was to provide a platform for industry experts to discuss industry solutions for the latest regulatory and operational tax challenges for banks. It was a perfect platform to gain insight into the latest developments in the regulation of operational taxes: Amendments to the Common Reporting Standard (CRS) and how the Crypto-Asset Reporting Framework (CARF) may affect your organisation. Additionally, it provided learnings on how to deal with increasing tax authority scrutiny and improve your data and reporting processes to back up investigations. Many heads of operational tax departments across the biggest banks attended the conference and actively participated in many lively discussions.

The opening remarks of Ali Kazimi of Hansuke, chairman of the conference, gave us an outlook on what we could expect during the conference day in a very charming and funny way.

The concept of the entire conference was to provide many panels, discussion forums, and interactive sessions which included the audience rather than lecture-style presentations. In the first session – a panel discussion about how to deal with increased tax authority scrutiny, moderated by Mark Huyan of State Street – panelists Corinna Hedtke of Standard Chartered Bank, Pilar Espejo of BNY Mellon, Jeroen Van Der Wal, CEO of Taxology, and Robert Welzel, Partner at WTS Global, emphasised that dealing with increased tax authority scrutiny is a very big topic nowadays. In the UAE, for example, there is a strong enforcement of FATCA and CRS adoption. A new law defines “non-compliant FI” and “non-compliant person”. Banks are forced by law to collect missing data of their customers within 30 days of onboarding as a part of the customer due diligence (CDD) process. Otherwise, huge fines are planned – USD 5,000 per customer, which is a large amount for a retail bank with many customers. Non-compliance by the bank is treated as a violation of the law. During the discussion, we learned that not only the beneficial owner but the entire surrounding economic set-up including family members is considered. There is a high granularity of data required by authorities, and financial intermediaries are being held liable to collect correct data. Additionally, global custodians have the liability for the correctness of all data along the chain. The panel concluded that there is an exponential increase in the number of enquiries by tax authorities and that tax authorities have significantly more resources per customer for processing these enquiries than banks do.

The second very important and extensively discussed topic was the latest trend towards total tax transparency due to the Crypto-Asset Reporting Framework (CARF) coming into force. Hywel Griffith, Technical Advisor (CARF) at HMRC, and Corinna Hedtke, Director and Regional Lead Client Tax Information EMEA at Standard Chartered Bank, discussed questions around CARF and CARF interaction with CRS 2.0 with Abdullah Bhana, Senior Policy Advisor at HM Treasury. With CARF, the number of reports and amount of information that has to be collected is increasing dramatically. The information is very comprehensive and is kept for an indefinite period of time, which leads to a huge amount of data being accumulated over the years. In addition, everything is changing very rapidly in this area – new products and even new asset classes are appearing on the market fast while other existing products are disappearing from the market at a similarly high speed. This leads us to the question: Where is the limit? The panel concluded that there are still many uncertainties, e.g. CARF vs. stocks & bonds on blockchain – what is the difference? How can spillovers be prevented? There are still many unanswered questions, which does not make it easier for financial institutions to deal with this topic.

Subsequently, Steffen Gnutzmann, Partner at WTS Global, and Gohar Khan, Partner at KPMG and responsible for the Asset Management & Operational Taxes team, examined recent developments in the area of EU WHT reclaims and showed that there were completely different approaches to this subject in different countries across Europe. As a result of these different approaches, the European Commission launched a public consultation on the EU WHT framework in late 2021. Among other things, the issues included costly and inefficient procedures, lack of clarity regarding documentation requirements, lack of digitalisation as well as reliance on a paper filing system.

Following initial feedback and a questionnaire stage, the consultation has moved to a third stage with the Commission being expected to publish the draft legislation, the FASTER proposal, on 28 June. The aim of the EU initiative is to streamline what are considered to be burdensome withholding tax relief procedures for cross-border investments in the securities market. The next steps are the European Commission’s draft legislation on 28 June 2023 followed by the consultation on the draft legislation.

There was a large panel of high-profile experts discussing how to prepare for amendments to the Common Reporting Standard (CRS). Jenny Turner, Executive Director Group Tax at UBS, Paul Worlock, Anti-Tax Evasion/Operational Tax Director at NatWest, David Smith, CRS Lead at HMRC, Martin Killer, Financial Services Tax Partner and Head of Operational Tax at Grant Thornton and Chloe Tuffin, Director at Deloitte, entered the discussion dealing with the question about the influence of CARF on CRS and vice versa, since – alongside the publication of the CARF in 2022 – the OECD also published amendments to the Common Reporting Standard (CRS) which will be implemented by participating jurisdictions. Some of the highlights of this publication include electronic money accounts, which were included in the scope of CRS, the treatment of the e-money providers as depository institutions, the introduction of Central Bank Digital Currencies (CBDC), the definition of crypto-assets as financial assets, the inclusion of additional data points in CRS reporting as well as additional CRS due diligence requirements.

The effective implementation of the Central Electronic System of Payment Information (CESOP) was discussed in the panel with Gary Campbell, Tax Partner, Tax & Legal at Deloitte, Olivia Boyle, Associate Director, Tax & Legal at Deloitte, and Tom Howgate, Director at Deloitte.

The fact is that from 2024 onwards, all EU payment service providers (PSPs) will be required to record and report transactional data for cross-border payments. The main concern in the discussion was how to deal with the increased number of transactions within the scope of CESOP and how to ensure that the systems are prepared and can withstand the strain of extra data reporting requirements. The timeline for the implementation is very tight – this reporting regime will come into force in January 2024. Thus, the question is what firms should do now to increase efficiency while managing external stakeholders and their interests as well as balancing reporting compliance with data protection requirements. This reporting regime could be seen as “FATCA and CRS on steroids”, since it requires quarterly line-by-line reporting of all transactional data for all cross-border payments. The European Commission has prepared penalties for not filing, filing incorrectly, or overfiling. Expected differences between Member States, similar to CRS in terms of files (size, format, XML scheme) and reporting procedures, submitting transactional data to 20+ tax authorities as well and monitoring the changes per country were seen as huge challenges in this regard.

In the last conference session, chaired by Susanne Rauscher-Nwokedi, Senior Business Analyst at SDS, and attended by Mathias Frostholm Kristensen, Head of Unit at Skattestyrelsen (the Danish tax agency), and Tom Howgate, Director at Deloitte, the question of how tax administrations are improving tax processes for businesses and customers was raised. In a short overview, Mathias described the quick refund process, which is being used at the Danish tax agency. The EU initiative for standardisation and simplification of the withholding tax reclaim procedures in the EU, better known under the acronym FASTER, was the main subject of discussion. Tom Howgate emphasised three building blocks of the initiative:

  • Documentation – standardised digital TRC (Tax Residence Certificate)
  • Report – standardised XML sent to the corresponding tax authority
  • Reporting process – relief at source (TRACE) or quick refund

Changes in the TRACE regime are expected, which may include the reporting of acquisition costs and the introduction of intra-year reports. Apart from that, the question of the actual beneficial owner will still remain a difficult one to answer.


  • Again, this conference proved to be a platform where the current hot topics in the tax industry are discussed. The conference attracted industry professionals, tax experts, and tax authority representatives from across Europe.
  • All topics discussed are more than relevant for the entire financial industry and will keep us all very busy in the next months and years.
  • As a technology and software solutions provider in the area of international tax and regulatory reporting for FATCA, CRS, QI, OECD TRACE, and WHT, SDS was delighted to sponsor this excellent industry event and to actively contribute to all expert discussions.

Feel free to contact our sales managers anytime for further information, an expert chat, or any discussion about the topics mentioned above.

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Hrvoje Kajzer
Sales Account Manager