(Yicai Global) Jan. 8 -- The Chinese version of the 'Common Reporting Standard,' benchmark for 'Automatic Exchange of Financial Information in Tax Matters,' known as AEOI, will go into operation this year. It marks an important step for China to harmonize its tax and financial information system with international benchmark standards.

The People's Bank of China, the central bank, issued an urgent document to require the subordinate institutions to strengthen cooperation with the local tax authorities and to guide the due diligence of the financial institutions within their jurisdiction.

The rules for financial institutions for the due diligence of tax-related information of financial accounts owned by non-residents are applied to commercial banks established in China under the laws, which include wholly foreign-owned banks, joint ventures banks, and foreign bank branches, China Postal Savings Bank, urban credit cooperatives, rural credit cooperatives and other financial institutions offering deposits accounts, as well as China Development Bank and non-commercial banks.

The State Administration of Taxation also unveiled a multilateral tax data service platform for the Chinese version of CRS on its website on Dec. 19, 2017, following the release of the rules. This marks a major progress for China in the automatic exchange of financial information in tax matters, China Business Journal reported.

"CRS, developed in response to the G20 request and approved by the OECD Council in July 2014, calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis," says the Organisation for Economic Co-operation and Development.

China is one of the 53 countries in the OECD which exchange tax information. China will start automatic and bulk exchanges of financial information on tax matters in September 2018 with countries and regions under some relevant 74 agreements signed in accordance with CRS Operational Guidelines.

The Chinese version of CRS is a multilateral information exchange mechanism designed on the basis of international standards. It is roughly the same as the multilateral FATCA agreements, which set international standards on the issue, in content, with only some minor differences in terms of object of reporting, the due diligence threshold for personal accounts, the types of financial institutions exempt from reporting, and penalties, the State Administration of Taxation said.