By: Dave Olenzak. President and Founder of TWC.
The OECD created the Common Transmission System (CTS) to exchange CRS data. The CTS system is not a data warehouse, rather it works like a traffic policeman. Local tax authorities receive CRS data from their regulated Financial Institutions, package it for exchange and send it to the CTS. The CTS checks the security protocols and passes the data onto the destination tax authority.
Once the OECD built the CTS, they realized that it could be used to exchange other types of data between tax authorities – specifically data to be exchanged for the OECD’s Base Erosion and Profit Shifting (BEPS) initiative. They expanded CTS to include the exchange of Country-by-Country data (BEPS Action Item 13) and Exchange of Tax Rulings (BEPS Action Item 5).
Just recently, the OECD has announced CTS version 2.0, which will expand the exchange of information from 3 data types to 25.
CTS 2.0 is expected to go into testing in October 2020 and into production at the beginning of March 2021.
By: David Olenzak