What is XML and why is it used for FATCA and CRS reporting?
Posted: Friday 16 February 2024
With a well-established product that is designed to take the headache out of CRS and FATCA reporting, we are often asked by new clients why their submissions need to be in .XML at all. Why couldn’t they be in Excel for example? So we thought we would explain the beauty of the .XML format.
Why do AEOI submissions need to be in .XML?
In terms of global financial transparency, the Automatic Exchange of Information (AEOI) which encompasses both CRS and FATCA reporting, is a key mechanism for combating tax evasion and ensuring fiscal accountability among participating countries. At the heart of this exchange lies the XML (eXtensible Markup Language) format, serving as the backbone for AEOI submissions. But just why is XML the preferred choice for this vital data interchange?
1. Structured Data Representation:
XML's structured format adeptly organises complex financial information, ensuring the precise categorisation crucial for AEOI submissions.
2. Interoperability:
Unlike Excel which is just one of many spreadsheet programs that require users to have specific software installed, XML's interoperability bridges diverse software systems and facilitates smooth data exchange between jurisdictions participating in AEOI.
3. Flexibility and Extensibility:
XML's adaptability to evolving AEOI requirements enables easy integration of new data elements or modifications without disrupting the existing framework.
4. Human-Readable and Machine-Readable:
Balancing human readability with machine readability, XML's structured syntax supports both manual scrutiny and automated data handling in AEOI processes.
5. Security and Validation:
XML's security features, including digital signatures and encryption, enhance the protection of sensitive financial data in AEOI submissions. Additionally, XML Schema Definition (XSD) enables validation checks for data accuracy and completeness.
In summary, XML is the ideal option for a standardised, interoperable, and secure platform for AEOI submissions, to meet the demands of efficient and transparent global financial collaboration. Still not a .XML fan, don’t worry, our Tax Data Exchange Software loves it and will easily take your data and swiftly convert it for super swift and accurate CRS & FATCA submissions.
