APAC region underprepared for tax reporting, says report

Financial institutions in the Asia-Pacific region are ‘behind the curve’ in preparing for global tax reporting requirements, according to a recent survey.

Over 90% of financial institutions surveyed by Wolters Kluwer Financial Services and the GRC Institute said they had not started implementing the Global Account Tax Compliance Act (GATCA).

An additional 60% said they had not yet started discussing their strategy internally.

The research also asked APAC firms about their preparation for the US Foreign Account Tax Compliance Act (FATCA), requiring foreign financial institutions to provide reports on US clients. The results showed that nearly 90% of financial institutions are taking a “tactical” approach to FATCA reporting, of which the large majority are tackling FATCA reporting manually.

“Taking a tactical approach for FATCA reporting – be it completely manual or semi-automated – significantly increases the risk of being caught out by tax, and with the financial institutions’ reputation at stake, any form of regulatory compliance should not be taken lightly,” says Wouter Delbaere, Asia-Pacific market manager, regulatory reporting at Wolters Kluwer Financial Services.

“Complicating matters further, the US has indicated that FATCA is here to stay, which in essence leaves financial institutions in the awkward position of having to comply with two similar, yet divergent standards.”