The Organization for Economic Co-operation and Development (OECD) has published an open consultation paper in which it outlines how due diligence professionals can “prevent the abuse of investment migration programs to circumvent the CRS” (Common Reporting Standards), and is asking for public input to that effect.
Of note is that the report explicitly emphasizes that Citizenship/Residence by Investment programs, per se, have nothing to do with tax evasion/avoidance:
Paragraph 6 of the five-page document states that
“CBI/RBI schemes do not offer a solution for escaping the legal scope of reporting pursuant to the CRS. These schemes grant a right of citizenship of a jurisdiction or a right to reside in a jurisdiction. They generally do not provide tax residence (an overview of the tax residency rules for all jurisdictions participating in the CRS can be consulted here). Reporting under the CRS is based on tax residence, not on citizenship or the legal right to reside in a jurisdiction.”
The document further acknowledges that there are many legitimate reasons why individuals would want to obtain a second passport or residence through investment and that use of such programs to avoid CRS compliance is merely a potential risk factor.
Somewhat more ominous are the implications of paragraph 20:
“In addition to the above, the OECD is considering a range of additional approaches to prevent the abuse of CBI/RBI schemes. This may include both tax compliance and policy related measures and will take into account the possible role of all stakeholders involved, including the jurisdictions offering these schemes, the tax administrations of jurisdictions participating in the CRS, financial institutions subject to CRS reporting, the intermediaries promoting the schemes and taxpayers.”
Read the full document here: OECD Consultation on Preventing Abuse of Investment Migration Programs
In response to the document, the Investment Migration Council issued a call to its members for feedback and stated that it would be formally engaging with the OECD on the matter in the coming weeks. “The industry needs to work together, putting its differences aside to ensure its sustainability in the long term, and there has never been a better time to do so through the IMC,” CEO Bruno L’Ecuyer of the IMC told Investment Migration Insider in an email.