Tax information exchange software

Tax information exchange software is software used in the finance industry to meet the legal requirements for financial institutions and other regulated entities to comply with tax information exchange rules, including the Foreign Account Tax Compliance Act and forthcoming rules adopted pursuant to the Common Reporting Standard issued by the Organisation for Economic Co-operation and Development. Broadly, tax information exchange software classifies and categorizes items to be reported and generates properly formatted reports in accordance with published schema such as FATCA XML v1.1 schema issued by the Internal Revenue Service or UK FATCA XML Schema v1.4 issued by HM Revenue and Customs.
History
Although Tax Information Exchange Agreements have existed for many years, the adoption of the Foreign Account Tax Compliance Act and the Common Reporting Standard have changed international tax reporting requirements and have shifted tax information exchange from an on-request basis to an automated process. Governments will exchange account information with the country of residence of account holders maintaining financial accounts at financial institutions within their country. To facilitate automated exchange of information, tax authorities require financial institutions within the country to transmit to them data concerning their non-resident account holders. A new industry has emerged to provide software to analyze which account holders are within scope of reporting, to track relevant details and compliance, and to generate the reports with the required data in the required formats.

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