Executive Summary

A tightening regulatory climate and increased tax transparency with the introduction of the Automatic Exchange of Information (AEOI) and the Common Reporting Standard (CRS) are levelling the global playing field and making private wealth management hubs more competitive, presenting Hong Kong and Singapore with an opportunity to attract offshore clients.

While client tax reporting services are generally not a core function of financial institutions, the demand for such services has increased as clients seek to mitigate regulatory risks. Overall, 65% of our sample population have noticed a rising interest from their clients in client tax reporting services over the past two years and 97% predicted that interest will increase over the next three years.

Two-thirds (66%) of the institutions that participated in our survey reported that they plan to increase investment in additional client tax reporting services over the next 12 months based on client demand, highlighting how important it is for firms to increase their client tax reporting capabilities. Most institutions are planning to increase investment in both in-house tools and external providers.

The top three markets that institutions receive requests in creating tax reports for are Mainland China, Indonesia and Europe. Proximity and cultural ties are key factors in determining where investors seek their offshore financial services, thus Hong Kong and Singapore are well-located offshore hubs in a region that leads the world in wealth creation.

While financial institutions’ familiarity with AEOI/CRS is good (average: 7.6 out of 10), their familiarity with creating client tax reports is significantly lower (average: 6.9 out of 10). This emphasizes the need for more training, as currently only 33% of firms offer training specifically on client tax reporting.

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