The new system should automatically and systematically transmit all relevant information. The agreement has been informally referred to as GATCA (the global version of FATCA), but “CRS is not just an extension of FATCA.”  In 2016, a legal expert lamented that “the IRS has a much more ambitious scope, and modelling the FATCA standard has created problems for its implementation in Europe.”  And a “representation of the interests of the private sector, representing financial services and law firms,” went even further and saw a “showdown” between the two regimes.  Its aim is to combat tax evasion. The idea was based on the implementation agreements of the US Foreign Account Tax Compliance Act (FATCA), whose legal basis is the Convention on Mutual Tax Assistance. 97 countries have signed an implementation agreement and others intend to sign it at a later date. The first declarations took place in 2017, many of the others from 2018. A1: Foreign financial institutions (FFI) are required to tax withholding tax on certain U.S. products at source under FATCA`s 2-IGA model, but there is no withholding tax under the CRS. The 1-IGA model has two variants: reciprocal and not reciprocal. Whether or not it is a reciprocal IGA, the tax administration in the area of jurisdiction in which the FFI is established (or foreign branch of FFI, headquartered in the jurisdiction) will collect U.S. data and automatically transmit it to the IRS.
However, the IRS is not required to return the favour under non-reciprocal IGAs. This means that each jurisdiction can negotiate and define its own accounts to declare in its agreement. [Citation required] For example, the implementation of an agreement between the Government of the Republic of South Africa and the Government of the United States of America on the implementation of the U.S. Account Compliance Act (FATCA) is an important step for South Africa in preparing for the automatic exchange of information within the meaning of the IRS. With respect to fatca, South African financial institutions are required to provide important financial information to SARS for transmission to the United States of America. In August 2020, more than 2,500 bilateral exchanges were activated for jurisdictions that committed to exchange CBC reports, and the first automatic exchange of CBC reports took place in June 2018. These include exchanges between the signatories of the Convention on Multilateral Competent Authorities (CBC MCAA), between eu Member States, in accordance with the EU Directive 2016/881/EU, and between signatories of bilateral agreements for the exchange of competent authorities under double taxation agreements or exchange of tax information, including 41 bilateral agreements with the United States. Legal systems continue to negotiate CBC reporting agreements and the OECD will issue regular updates to clarify things for MNE groups and tax administrations. An agreement of the competent authority (CAA) is a bilateral agreement. It allows the exchange of information on demand (EOIR) or automatic exchange of information (AIA) on the basis of existing legal instruments: F: What is the difference between the 1-IGA model and the 2-IGA model? A: See below.
(iii) a bilateral double taxation agreement (DBA) under Article 26 of the OECD Model Tax Convention (applicable to the AIA and EOIR). As of July 2015[update], 53 countries had signed the automatic information exchange agreement;  As of July 2016[update], 83 jurisdictions had signed the agreement.  The MCAA CRS specifies the information exchanged and when. It is a multilateral framework agreement. A specific bilateral relationship under the MCAA CRS only comes into force when the two jurisdictions have implemented the convention, submitted the necessary notifications in accordance with Section 7 and presented themselves to each other. The FFI Model 2-IGA is required to report the same information directly to the IRS, without the tax administration acting between its jurisdictions.