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Frequently Asked Questions

CRS

CRS stands for Common Reporting Standard. CRS is a new information-gathering and reporting requirement for financial institutions in participating countries, to help fight against tax evasion and protect the integrity of tax systems.

The main objective of CRS is to improve tax transparency through information sharing about financial assets of tax residents of a country in other jurisdictions participating in the CRS program.

CRS seeks to establish the tax residency of customers. Under the CRS, financial institutions are required to identify customers who appear to be tax resident outside the country where they hold accounts, products, and report certain information to our local tax authority. Local Tax Authorities will then exchange this information with the tax authority where you are a tax resident.

For new Customers, the bank is required to obtain information on customer’s tax residence(s) for tax purposes, and their tax identification number (s), where applicable.

For existing customers, the Bank will conduct a review and contact all impacted customers to obtain self certification forms in which they determine their residence for tax purposes and provide their tax identification number. 

CRS refers to Non-Financial Entities by their acronym, NFEs. It is essentially any Entity that is not a Financial Institution. NFEs are then split into Passive NFEs or Active NFEs with additional procedures required in relation to Passive NFEs.

The general rule is that a Passive NFE is an NFE that is not an Active NFE. The definition of Active NFE essentially excludes Entities that primarily receive passive income or primarily hold assets that produce passive income (such as dividends, interest, rents etc.), and includes entities that are publicly traded (or related to a publicly traded Entity), Governmental Entities, International Organisations, Central Banks, or holding NFEs of nonfinancial groups. An exception to this is an Investment Entity that is not in a Participating Jurisdiction Financial Institution, which is always treated as a Passive NFE.


An entity will be classified as Active NFE if it meets any of the following criteria:
 

  • The NFE is not yet operating a business and has no prior operating history, (a “ start-up NFE”) but is investing capital into assets with the intent to operate a business other than that of a Financial Institution, provided that the NFE does not qualify for this exception after the date that is 24 months after the date of the initial organization of the NFE;
     
  • The NFE was not a Financial Institution in the past five years, and is in the process of liquidating its assets or is reorganizing with the intent to continue or recommence operations in a business other than that of a Financial Institution;
     
  • Less than 50% of the NFE’s gross income for the preceding calendar year or other appropriate reporting period is passive income and less than 50% of the assets held by the NFE during the preceding calendar year or other appropriate reporting period are assets that produce or are held for the production of passive income;
     
  • The NFE is a Governmental Entity, an International Organization, a Central Bank, or an Entity wholly owned by one or more of the foregoing;
     
  • Substantially all of the activities of the NFE consist of holding (in whole or in part) the outstanding stock of, or, providing financing and services to one or more subsidiaries that engage in trades or businesses other than the business of a Financial Institution, except that an Entity does not qualify for this status if the Entity functions (or holds itself out) as an investment fund, such as a private equity fund, venture capital fund leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes;
     
  • The stock of the NFE is regularly traded on an established securities market or the NFE is a Related Entity of an Entity the stock of which is regularly traded on an established securities market;

 

  • The NFE primarily engages in financing and hedging transactions with, or for, Related Entities that are not Financial Institutions, and does not provide financing or hedging services to any Entity that is not a Related Entity, provided that the group of any such Related Entities is primarily engaged in a business other than that of a Financial Institution; or

 

  • The NFE meets all of the following requirements (a “non-profit NFE”) : 

 

  • It is established and operated in its jurisdiction of residence exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or it is established and operated in its jurisdiction of residence and it is a professional organization, business league, chamber of commerce, labor organization, agricultural or horticultural organization, civic league or an organization operated exclusively for the promotion of social welfare

 

  • It is exempt from income tax in its jurisdiction of residence;

 

  • It has no shareholders or members who have a proprietary or beneficial interest in its income or assets

 

  • The applicable laws of the NFE’s jurisdiction of residence or the NFE’s formation documents do not permit any income or assets of the NFE to be distributed to, or applied for the benefit of, a private person or non-charitable Entity other than pursuant to the conduct of the NFE’s charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFE has purchased; and

 

  • The applicable laws of the NFE’s jurisdiction of residence or the NFE’s formation documents require that, upon the NFE’s liquidation or dissolution, all of its assets be distributed to a Governmental Entity or other non-profit organization, or escheat to the government of the NFE’s jurisdiction of residence or any political subdivision.
     

This will depend on where you live and your circumstances. Please contact a professional tax advisor or check the OECD website for more information on how to determine your tax residency, as RAK BANK cannot give tax advice.

You may find more information on how to determine tax residency by visiting the OECD website

The criteria of tax residency may be different from one country to another. For individuals, tax residence in a country can be based on a number of factors (one or more may apply) such as Nationality, number of days you spend in a country, place of work, accommodation and financial interests.

For example, in a large number of countries an individual’s tax residency is based on the number of days that he/she has stayed in the country. An individual is said to be resident in the country if he/she is in the country for more than 182 days in any fiscal year.

Typically, an individual will be resident for tax purposes in only one country (the country in which they live). Some individuals can be tax resident in more than one country.

The criteria of tax residency may be different from one country to another. For individuals, tax residence in a country can be based on a number of factors (one or more may apply) such as Nationality, number of days you spend in a country, place of work, accommodation and financial interests.

For example, in a large number of countries an individual’s tax residency is based on the number of days that he/she has stayed in the country. An individual is said to be resident in the country if he/she is in the country for more than 182 days in any fiscal year.

Typically, an individual will be resident for tax purposes in only one country (the country in which they live). Some individuals can be tax resident in more than one country.

Under the CRS, we are required to establish the tax residency status of all our customers, even if you are tax resident in the same country where you hold your account.

RAKBANK is required to report  customers’ tax details as per UAE Central Bank directive and as UAE is a participating jurisdiction in CRS.

RAKBANK will respect your data privacy. We will only disclose your information to the relevant tax authorities if we are legally required to do so and as per UAE Central Bank directives.

We are required by law to verify the details provided by you as a part of your self-certification. We may further ask you for a copy of your passport to verify your identity or for some other evidence of your tax residency declared in your self-certification.

The information provided to the tax authorities will have been provided in the self certification form, and details about the accounts and products you have with us, including:

  • The balance or value 
  • The total amounts of interest or payments credited

For list of countries participating in the CRS, alongside the dates that they will start exchanging information, please refer to the OECD CRS portal.

For further information on your tax residency, please refer to the rules governing tax residence that have been published by each national tax authority. You can also find out more at the OECD Automatic Exchange of Information portal. 

In Line with CRS requirements, Individuals will be required to provide:

  • Name
  • Address
  • Place of birth*
  • Date of Birth*
  • Country(ies) of tax residence
  • Taxpayer identification number(s)*

In Line with CRS requirements, Entities and Controlling Persons will be required to provide:

  • Entity Name
  • Address
  • Place of registration/incorporation
  • Entity Type
  • Taxpayer identification number
  • Country of Tax Residence

Below Controlling Person details:

  • Name
  • Date of Birth, Place and Country of Birth
  • Taxpayer Identification number
  • Country of tax residence
  • Controlling Person Type

Under CRS, tax authorities require financial institutions such as RAKBANK to collect and report certain information relating to their customers’ tax statuses.
If you open a new bank account, invest in new financial products or change your circumstances in some way, bank will ask you to certify a number of details about yourself. This process is called “self-certification” and the bank is required to collect this information under the CRS.

All financial institutions that includes banks, insurers and asset management businesses in participating countries are required to be compliant with the CRS.

The CRS form will remain valid unless there is a change in circumstances which affects your tax residence status or where any information provided in the form becomes incorrect. Under this certification, you, as an account holder, must inform the Bank within 30 days of any such change in circumstances.

A Taxpayer Identification Number, or TIN, is a unique combination of letters or numbers assigned by a country’s tax authority to an individual or an entity for tax administration purposes. Further information about the type of TIN applicable to your jurisdiction, please visit  OECD website.

The natural persons who exercise control over an entity. In the case of a trust, such term means the settler, the trustees, the protector (if any), the beneficiaries or class of beneficiaries, and any other natural person exercising ultimate effective control over the trust, and in the case of a legal arrangement other than a trust, such term means persons in equivalent or similar positions. The term “Controlling Persons” shall be interpreted in a manner consistent with the Recommendations of the Financial Action Task Force.

The authorised signatory can provide the certification of the entity/controlling person. Yes, the authorised signatory will be subject to documentation and reported if he/she is a tax resident in one or more of the participating jurisdictions.

  • Form W 9: A US tax form to be submitted by a “US person” providing relevant details
  • Form W 8 BEN: A US tax form used to confirm Non US status of an individual, in the event of presence of US indicia
  • Form W 8 BEN  E: A US tax form used to confirm Non US status of an entity, in the event of presence of US Indicia, except for passive NFE.