July 2016
National Tax Agency

Introduction of Reporting System for Automatic Exchange ofInformation on Financial Accounts of Non-Residents
As globalization of business transactions continues to expand, in order to address
tax evasion and avoidance through offshore financial accounts, the OECDdeveloped the “Common Reporting Standard (CRS)”, which calls on jurisdictions toobtain information from their financial institutions and automatically exchange that
information with other jurisdictions on an annual basis.
Overview of the CRS and Japan's system in response are as follows.

1. Overview of the Common Reporting Standard (CRS)(1) Tax administrations of each jurisdiction obtain reports of information on financial accounts ofnon-residents (both individual and entity) from financial institutions located in each jurisdiction,and based on the provision of exchange of information set forth in bilateral tax agreements, etc., itwill be automatically exchanged among the tax administrations of each jurisdiction.
a. Financial institutions obliged to report financial account information
Depository Institutions, such as banks, Specified Insurance Companies, such as life
insurance companies, Custodial Institutions, such as securities companies, and Investment
Entities, such as trusts.
b. Financial accounts subject to reporting
Depository Accounts, such as ordinary savings accounts, Cash Value Insurance Contracts orAnnuity Contracts, Custodial Accounts, such as securities accounts, and Equity Interests,
such as trust beneficiary rights.
c. Information subject to reporting
Account holder’s name, address, jurisdiction of residence, foreign taxpayer identification
number, account balance or value, total annual gross amount of interest and dividends
received, etc.
(2) Financial institutions with reporting obligation must identify the jurisdiction of residence of theaccount holder and determine the reportable accounts in accordance with the procedures set
forth in the CRS. To identify the jurisdiction of residence, the subject financial institution mustobtain a Self-Certification which indicates the jurisdiction of residence from the applicant for new
accounts, and also review its record for preexisting accounts.
(3) As of today, more than 100 countries, including Japan, have committed to exchange ofinformation with each other under the CRS starting 2017 or 2018. Furthermore, as for Japan,
information on financial accounts established abroad for residents of Japan will be provided
beginning in 2018.

2. Overview of the System in Japan
From the perspective of implementation of the exchange of information based on the CRS, Act on
Special Provisions of the Income Tax Act, the Corporation Tax Act and the Local Tax Act Incidental to
Enforcement of Tax Treaties ("Act on Special Provisions," hereinafter) has been amended as part of
the tax reform of 2015, a system for financial institutions described in 1(1)a above ("ReportingFinancial Institutions," hereinafter) to report information described in 1(1)c above to the district director
was adopted. The system will come into force on January 1st, 2017, and the first report shall be
submitted by the reporting financial institutions by April 30th, 2018.
– This leaflet is made for the purpose of reference to the CRS and legislation in Japan briefly. –In terms of financial accounts maintained by reporting financial institutions opened on or after January
1st, 2017 ("New Accounts," hereinafter), upon account opening, those who open a financial accountwith a reporting financial institution must fulfill the following responsibility defined in (1) below, and interms of financial accounts maintained by reporting financial institutions as of December 31st, 2016("Preexisting Accounts," hereinafter), each reporting financial institution must fulfill the following
responsibility defined in (2) below.
[JAPAN](1) Submission of aself-certification which indicates
name, address (location),jurisdiction of residence (*),
foreign taxpayer identification
number by those who open afinancial account with areporting financial institution.
[Start of processing by financial
institution beginning in 2017.](2) Determination ofjurisdiction ofresidence of eachholder of preexistingaccount by eachreporting financial
institution.

(3) Reporting of name, address(location),jurisdiction of residence,
foreign taxpayer identification
number, account balance or value,
and total annual gross amount ofinterest and dividends received,etc. regarding each holder of new
account or preexisting accountwhich is subject to reporting by
each reporting financial institution.
[Reporting 2017 figures in 2018.][Jurisdiction A]

Tax
Resident ofAdministration
Jurisdictionof Jurisdiction
AA

Reporting FinancialInstitutions
AAccounts ofResidents of Japan
Accounts of Residentsof Jurisdiction A
Accounts of Residentsof Jurisdiction B* Those whose jurisdiction ofresidence is Japan must also
indicate "Japan" as thejurisdiction of residence.

JapanNational
Tax Agency

B(4)Provision of collective information oncea year to foreign tax administrations inaccordance with tax treaties.

[Jurisdiction B]

Tax
Resident ofAdministration
Jurisdictionof JurisdictionBB(1) Submission of self-certification for new accounts to reporting financial institution (On orAfter January 1st, 2017)
In terms of new accounts, those who open a financial account with a reporting financial institution
through its business office, upon account opening, must submit a self-certification which indicatesthe name, address or location of head office or main business establishment, jurisdiction ofresidence, foreign taxpayer identification number (*), etc. to the head of the business office of thereporting financial institution, according to first half of (1) of Article 10-5 of the Act on Special
Provisions.
* Japanese Individual Number (nicknamed “My Number”) is exempt from reporting.

(2) Procedure of determining jurisdiction of residence by reporting financial institution forpreexisting accounts
In terms of preexisting accounts, each reporting financial institution must identify the jurisdiction ofz
residence of each holder of preexisting account based on the record in its possession before
December 31st, 2018 (*), according to (2) of Article 10-5 of the Act on Special Provisions.
* There are exceptions, such as time limit of December 31st, 2017 in case the account balance or value as
stof December 31 , 2016, exceeds JPY100-million,.

(3) Filing of reportable information to the district director by reporting financial institution
In case new accounts and preexisting accounts maintained by each reporting financial institution
are subject to reporting as of December 31st of that year, such reporting financial institution must
report the name, address or location of head office or main business establishment, jurisdiction ofresidence, foreign taxpayer identification number, and account balance or value of the contract,income from investment, possession, or transfer of the asset, etc. regarding each holder of new
account or preexisting account to the district director of the location of head office of the reporting
financial institution by April 30th of the following year, according to (1) of Article 10-6 of Act on
Special Provisions.
・– This leaflet is made for the purpose of reference to the CRS and legislation in Japan briefly. –